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Expectations Diverge for Economic Recovery in the US and China (Invesco, 3 min read) Both the US and Chinese stock markets have rallied. But Invesco is more confident on the longer-term prospects of the Chinese recovery rather than the US recovery. This is because of their ability to control the spread of the virus (only 623 active cases) compared with 60,000+ daily cases in the US. However, more fiscal stimulus from the US government could serve as a near-term catalyst for a US recovery. [Bullish China]
Should I Be Worried About a Double-Dip Recession? (JPAM, 2 min read) JPAM expects economic growth to be positive in H2 however the pace of reopening may hurt the economy. They advocate careful monitoring of high-frequency data (i.e. hotel occupancy and traveller traffic) to gauge the speed of recovery and advise investors to focus on quality and balance to navigate volatility due to uncertainty in the coming months.
Is the US Economy Running Out of Steam? (LGIM, 3 min read) The US opened up too quickly, which will make it difficult for it to remain on the V-shaped recovery. According to LGIM, Congress will oppose a full extension of $600 a week unemployment benefits but will approve another substantial package (up to $2tn). They continue to see more bankruptcies and redundancies as social distancing further increases due to rising cases. [Bearish US]
Immigration and Wage Dynamics: Evidence from the Mexican Peso Crisis (JPE, 60 page read) This paper shows that the only long-run consequences of low-skilled immigration in US labour markets are (a) worse labour market conditions for low-skilled natives who entered the labour force in high-immigration years, (b) lower housing prices in high-immigration locations, when immigrant workers disproportionately enter the construction sector and lower construction costs.