In data we don't trust

Posted by: Paul Donovan

01 May 2020

Daily update

  • Asia and Europe are taking the day off work (though this is much like any other day in lockdown). The ECB yesterday signalled that it would do whatever it takes to support the economy. Further liquidity injections at the June meeting seem likely.
  • Yesterday demonstrated the extent of data quality problems. Eurostat explained that they were guessing ("estimating") large parts of consumer price inflation, but published the numbers anyway. France and Spain, despite having more moderate and later lockdowns, posted worse GDP numbers than Italy. This seems… unlikely.
  • US initial jobless claims are a reliable number (you get money if you fill in the form). They suggest US unemployment is around 20%. That does include furloughed workers. Some people will receive more money on benefit than they would at work. However, consumers may have less confidence if they have been unemployed—even if temporarily. UK credit data today is relatively reliable. The US ISM is unreliable in these circumstances.
  • US-China tensions may be in focus. US President Trump was speculating on the origins of the virus (which scientists overwhelmingly agree is naturally occurring). There are reports the president may prevent a federal pension fund from buying some Chinese equities.

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