Chart of the Week : Wall Street vs Main Street

Macro
Christopher Dembik

Summary:  Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance.


Today’s chart highlights everything that’s wrong with America. While the stock market has jumped more than 32% since March 23, the U.S. economy has collapsed with cumulative jobless claims reaching more than 40 million over the same period and the unemployment rate is expected to climb around 21-22% in May according to our forecast.

What is currently happening in the U.S. is much more than anti-racism protests turning into riots, this is the accumulation of all the frustration from COVID-19 mismanagement by the authorities, its related economic consequences and the increase over the past years and even decades of wealth inequality.

The social contract has been broken for a long time in the U.S. The coronavirus crisis was the straw that broke the camel’s back and precipitated the U.S. society into a deep social crisis that was doomed to burst. It is not a coincidence that riots are more widespread in states with Gini coefficient above 0.481, such as the district of Columbia, New York, California or to a lesser extent Connecticut while there is barely demonstrations in states where inequalities are less important (Gini coefficient below 0.410), like Utah and Alaska.

The ongoing crisis also shows the progressive agenda promoted by the mayors of America’s larger cities, nearly all members of the Democratic Party, has led to poor results. They have especially failed with housing and public transport policies. If we take as example California, numerous new regulations have been implemented at state and city levels in order to promote green energy (notably California Solar Initiative) or access to healthy food, but this is clearly insufficient to reduce the huge opportunity gaps existing between communities. Policymakers haven’t put a definitive stop to NIMBY (which stands for “Not in My Backyard” and refers to residents’ opposition to new housing construction in their neighborhood) while it should be a top priority in order to lower housing prices and allow workers to move and live close to where they work. They also haven’t developed enough affordable public transport to reduce highway congestion, unclog city streets and, more importantly, bridge the gap between poor and wealthy neighborhoods.

This is a defining moment for America. The crisis reveals how deep is the social malaise of sections of the population deprived of equal opportunities.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide and Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.