Black Swan risks outlined for 2016
Societe Generale have released a chart on what they consider to be potential "black swans" in the market for 2016.  Alhough black swans are by nature tricky to predict, this chart is a useful way of understanding some of the upcoming risks that could sway investor sentiment and opinion.  Societe Generale sees an excess of potential downside risks to the global economy, with the greatest being a new global recession; although only slated as a 10% probability, it has maximum impact potential.  Another noted risk is a deflationary spiral, as signs of deflation are emerging across the market; with the Fed having limited means to combat it, the impact of such a spiral would be catastrophic.

The Road to Recovery: Which Economies are Reopening?

COVID-19 has brought the world to a halt—but after months of uncertainty, it seems that the situation is slowly taking a turn for the better.

Today’s chart measures the extent to which 41 major economies are reopening, by plotting two metrics for each country: the mobility rate and the COVID-19 recovery rate:

Mobility Index

This refers to the change in activity around workplaces, subtracting activity around residences, measured as a percentage deviation from the baseline. COVID-19 Recovery Rate

The number of recovered cases in a country is measured as the percentage of total cases.

Data for the first measure comes from Google’s COVID-19 Community Mobility Reports, which relies on aggregated, anonymous location history data from individuals. Note that China does not show up in the graphic as the government bans Google services.

COVID-19 recovery rates rely on values from CoronaTracker, using aggregated information from multiple global and governmental databases such as WHO and CDC.

Reopening Economies, One Step at a Time

In general, the higher the mobility rate, the more economic activity this signifies. In most cases, mobility rate also correlates with a higher rate of recovered people in the population.

Here’s how these countries fare based on the above metrics.

Country Mobility Rate Recovery Rate Total Cases Total Recovered Argentina -56% 31.40% 14,702 4,617 Australia -41% 92.03% 7,150 6,580 Austria -100% 91.93% 16,628 15,286 Belgium -105% 26.92% 57,849 15,572 Brazil -48% 44.02% 438,812 193,181 Canada -67% 52.91% 88,512 46,831 Chile -110% 41.58% 86,943 36,150 Colombia -73% 26.28% 25,366 6,665 Czechia -29% 70.68% 9,140 6,460 Denmark -93% 88.43% 11,512 10,180 Finland -93% 81.57% 6,743 5,500 France -100% 36.08% 186,238 67,191 Germany -99% 89.45% 182,452 163,200 Greece -32% 47.28% 2,906 1,374 Hong Kong -10% 97.00% 1,067 1,035 Hungary -49% 52.31% 3,816 1,996 India -65% 42.88% 165,386 70,920 Indonesia -77% 25.43% 24,538 6,240 Ireland -79% 88.92% 24,841 22,089 Israel -31% 87.00% 16,872 14,679 Italy -52% 64.99% 231,732 150,604 Japan -33% 84.80% 16,683 14,147 Malaysia -53% 80.86% 7,629 6,169 Mexico -69% 69.70% 78,023 54,383 Netherlands -97% 0.01% 45,950 3 New Zealand -21% 98.01% 1,504 1,474 Norway -100% 91.87% 8,411 7,727 Philippines -87% 23.08% 15,588 3,598 Poland -36% 46.27% 22,825 10,560 Portugal -65% 58.99% 31,596 18,637 Singapore -105% 55.02% 33,249 18,294 South Africa -74% 52.44% 27,403 14,370 South Korea -4% 91.15% 11,344 10,340 Spain -67% 69.11% 284,986 196,958 Sweden -93% 13.91% 35,727 4,971 Switzerland -101% 91.90% 30,796 28,300 Taiwan 4% 95.24% 441 420 Thailand -36% 96.08% 3,065 2,945 U.S. -56% 28.20% 1,768,346 498,720 United Kingdom -82% 0.05% 269,127 135 Vietnam 15% 85.02% 327 278

Mobility data as of May 21, 2020 (Latest available). COVID-19 case data as of May 29, 2020.

In the main scatterplot visualization, we’ve taken things a step further, assigning these countries into four distinct quadrants:

1. High Mobility, High Recovery

High recovery rates are resulting in lifted restrictions for countries in this quadrant, and people are steadily returning to work.

New Zealand has earned praise for its early and effective pandemic response, allowing it to curtail the total number of cases. This has resulted in a 98% recovery rate, the highest of all countries. After almost 50 days of lockdown, the government is recommending a flexible four-day work week to boost the economy back up.

2. High Mobility, Low Recovery

Despite low COVID-19 related recoveries, mobility rates of countries in this quadrant remain higher than average. Some countries have loosened lockdown measures, while others did not have strict measures in place to begin with.

Brazil is an interesting case study to consider here. After deferring lockdown decisions to state and local levels, the country is now averaging the highest number of daily cases out of any country. On May 28th, for example, the country had 24,151 new cases and 1,067 new deaths.

3. Low Mobility, High Recovery

Countries in this quadrant are playing it safe, and holding off on reopening their economies until the population has fully recovered.

Italy, the once-epicenter for the crisis in Europe is understandably wary of cases rising back up to critical levels. As a result, it has opted to keep its activity to a minimum to try and boost the 65% recovery rate, even as it slowly emerges from over 10 weeks of lockdown.

4. Low Mobility, Low Recovery

Last but not least, people in these countries are cautiously remaining indoors as their governments continue to work on crisis response.

With a low 0.05% recovery rate, the United Kingdom has no immediate plans to reopen. A two-week lag time in reporting discharged patients from NHS services may also be contributing to this low number. Although new cases are leveling off, the country has the highest coronavirus-caused death toll across Europe.

The U.S. also sits in this quadrant with over 1.7 million cases and counting. Recently, some states have opted to ease restrictions on social and business activity, which could potentially result in case numbers climbing back up.

Over in Sweden, a controversial herd immunity strategy meant that the country continued business as usual amid the rest of Europe’s heightened regulations. Sweden’s COVID-19 recovery rate sits at only 13.9%, and the country’s -93% mobility rate implies that people have been taking their own precautions.

COVID-19’s Impact on the Future

It’s important to note that a “second wave” of new cases could upend plans to reopen economies. As countries reckon with these competing risks of health and economic activity, there is no clear answer around the right path to take.

COVID-19 is a catalyst for an entirely different future, but interestingly, it’s one that has been in the works for a while.

Without being melodramatic, COVID-19 is like the last nail in the coffin of globalization…The 2008-2009 crisis gave globalization a big hit, as did Brexit, as did the U.S.-China trade war, but COVID is taking it to a new level.

—Carmen Reinhart, incoming Chief Economist for the World Bank

Will there be any chance of returning to “normal” as we know it?