Head of Macroeconomic Research
Summary: Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance.
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In today’s edition, we have done some data crunching about COVID-19 numbers in France in order to better understand the risk of second wave and its potential impact on the economy. France is one of the European countries that has been in the spotlight recently due to the strong increase in new COVID-19 cases. In the space of one week, the official daily count of new cases has almost doubled to reach 5,413 and the daily number of new identified clusters has also almost doubled to 40 (as of yesterday). The sharp increase is also confirmed if we look at the 7-day moving average. The number of new cases is at 4,932 versus 3,211 one week ago. Health authorities are now talking about “exponential” second wave of the virus and new social distancing measures have been implemented, such as mandatory mask-wearing in all public spaces (indoors and outdoors) in the biggest cities and compulsory mask-wearing in workplace everywhere in France, as of Sept. 1 (with some exceptions to the rule).
However, contrary to the situation that prevailed in late March/April, the number of fatalities is almost close to zero (13 fatalities as of August 29 vs around 1,000 at the height of the crisis) and new hospital and intensive care unit (ICU) entries are still very limited. At the height of the crisis, the number of patients in intensive care was above 7,000 versus less than 400 nowadays. To some extent, the situation is a little incongruous: we are in the midst of a massive pandemic but hospitals are basically empty. Let’s dig into data. The surge in new cases, which is considered as “exponential”, is certainly partially the result of increased testing. On a weekly basis, the government is currently running about 800,000 tests and wants to reach the threshold of 1,000,000 per week shortly. Another explanation is that young adults, which represent a growing number of new cases but are more resilient than older people, are less vigilant and more reluctant to strictly respect social distancing measures, thus facilitating the spread of the virus. Despite the surge in the number of new cases, the pandemic seems to be under control for the moment. However, we are not out of the woods yet. It is unclear whether the health system will have the capacity to simultaneously deal with COVID-19 and flu this fall if the number of hospital and intensive care unit entries would sharply rise.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
