Global Macro Strategy Does mobility activity support the rise in equities? UBS Evidence Lab inside

Global equities continue to track the 2nd derivative of changes in our global composite mobility score. We see loosening restrictions over coming weeks in large US states as supportive of increased activity – and equities.

03 Jun 2020

Source: UBS Evidence Lab, Google LLC "Google COVID-19 Community Mobility Reports."

This line graph charts the rise and fall of global purchasing activity from 15 February to the end of May.

Equities continue to be supported by improvement in mobility data

Global equities continue to track the 2nd derivative of weekly changes in our global composite mobility score, as demand has moved with the mobility data. Mobility scores for the world, regions, countries and US states use UBS Evidence Lab high frequency data for: 1) foot traffic, 2) traffic congestion, and 3) public transit. The improvement in global mobility has been a consistent 2-4pp each week, with the last two weeks sustaining the trend, albeit closer to the bottom of that range. The level of global activity is down ~37.5% and eventually the level should matter. But we still see loosening restrictions over coming weeks in large US states as supportive of increased activity –  and thus equities – based on big jumps in mobility seen after "re-openings".

Shifts in mobility/activity have been notable across countries, states, categories

Under the surface, there is significant variation across countries, states and categories.

  • Europe activity rose by more again across the data sets, up 4pp week/week and +27pp since mid-April. Europe mobility has caught up to APAC ex mainland China. The activity bump was +2pp week/week in both the US and APAC. Italy had the biggest rise week/week followed by Sweden, NZ, Canada and Spain. Latam mobility was the weakest.
  • Shapes of recovery? We group countries by dates when restrictions were loosened – mid-Apr Wave 1, early May Wave 2, and late May Wave 3. Wave 1 country mobility has risen from down 55% in mid-April to down 18% currently, or over 5pp improvement per week, with a bigger bump initially and little sign of let up. Both Waves 2 and 3 show the same 5pp+ pace of improvement per week. Thus, recoveries seem intact.
  • Retail up more than transit.  Retail & rec foot traffic globally was up 5pp week/week, above the average increase since mid-April. Transit across the three measures was up 2pp week/week and the average weekly increase has been smaller with the level lower (57% down).
  • Big US states still have depressed activity. The largest US states by GDP such as California and NY still show depressed activity of down over 40%. States accounting for 60% of US GDP have mobility down 30% or more - compared to the 50 state average of down 21%. Thus "re-openings" of big states over coming weeks can be a key driver of US equities if waves above are a guide (5pp+ weekly improvement).

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