How to Read the Dashboard
Our crisis dashboard includes signals from three areas: 1) public health, 2) the consumer sector and 3) financial markets. By pulling big data from traditional sources (earnings growth and gross domestic product, for example) and nontraditional sources (like Google Trends and Glassdoor), we can create a better mosaic of the road back. Public health, of course, is the key: until vaccines are broadly available, the cascading impact of the virus may continue.
The dashboard color codes (red, yellow or green) indicate the current state of each signal, while the arrows indicate the trend (improving, deteriorating or unchanged).
What’s Changed Since Our December Update?
As global distribution of several COVID-19 vaccines begins to ramp up, rising caseloads are necessitating additional lockdown measures in many regions, causing us to downgrade our travel and leisure indicator. Emerging virus mutations also pose new challenges for public health officials.
On the positive side, we’ve seen improvement in the overall employment picture as well as in financial conditions. In geopolitical developments, the US government has transitioned to new leadership in both the executive and legislative branches, though the process was marred by at times violent protests.
- Globally, the number of confirmed COVID-19 cases—currently about 96 million—continues to rise, with deaths recently topping two million. Vaccines are being rolled out, although slower than expected: roughly 12 million doses in the US, 10 million in China and nearly 4 million in the UK.
- The R0, which tracks the average cases spread by one person, remains around 1.1 globally, led by countries like the US at 1.1. Italy and the UK have improved after adding lockdown measures, with the R0 returning to 1.0. France remains elevated at 1.3.
- US hospitalizations have risen to an estimated 130,000, up from approximately 104,000 in mid-December. Arizona has become a new hotspot, with hospitalizations nearing 5,000.
- Many US school districts are grappling with COVID-19 cases in students and faculty, resorting to shutdowns while they try to control the virus spread. Other schools continue to blend virtual and in-person schooling, while major districts including New York City remain open.
- Higher education continues to struggle, with outbreaks prompting some schools to quarantine students or send them home. According to a New York Times survey of over 1,600 US colleges and universities, more than 397,000 COVID-19 cases have been reported from the start of the pandemic through the end of December 2020.
Travel and Leisure:
- Airline flights originating in the US have rebounded from their lows, stabilizing at about 45% lower year-over-year. Transportation Safety Administration travel data remains down roughly 50% year over year.
- Globally, flight data is down just 50% after being down 74% at the end of November. Countries such as Australia, Singapore, and South Korea are seeing significant increases in travel activity.
- In the US, “OpenTable” bookings are down 60% from last year, a slight improvement despite colder weather and increasing virus cases. Many countries, however, are seeing restaurant bookings down 100% as they resume lockdown measures.
- Despite struggling earlier in the year, Airbnb decided to proceed with its initial public offering on December 10, and has garnered a market cap of approximately $75 billion.
- Mobility data, particularly in Europe, is down sharply due to the newly imposed lockdowns. The relative bright spots are Brazil (down 5%), India (down 12%) and China (down 9%).
- Existing home sales have maintained their strong momentum, up 25.8% year-over-year in November as lasting work-from-home arrangements require more space. The number of people searching for mortgages is up 10% year over year.
- Refinancing activity has picked up, as homeowners look to refinance ahead of potentially higher long-term interest rates.
Employment & Household Finances:
- US jobless claims have picked up slightly in recent weeks, and 75 million people have filed for unemployment benefits since mid-March 2020. US unemployment stayed at 6.7%, despite strains from a COVID-19 surge causing the US labor market to shed jobs for the first time in eight months.
- In the US, job postings have improved slightly from the end of 2020, but remain down 10% year-over-year. Globally, job postings remain down 13% year-over-year.
- In late December, Congress approved $600 more in stimulus payments and extended unemployment benefits. Investors and consumers expect a bigger stimulus effort from a Democratic president and Congress: Joe Biden has recently called for another $1,400 in stimulus payments to most households.
- Based on Simfund data, bond fund inflows continue—about $60 billion over the four weeks ended January 13. Vaccine and post-election optimism has drawn massive equity inflows of nearly $87 billion over the past four weeks.
- According to The Investment Company Institute, money-market fund assets ticked up slightly to around $4.3 trillion, down from a peak of $4.8 trillion in mid-May. This suggests that investors continue to deploy cash into bonds and stocks.
Financial Conditions (Policies, Spreads and Curves):
- High-yield spreads have continued to tighten, from over 400 basis points at the end of November to about 348 basis points as of January 20, based on the average option-adjusted yield spread of the Bloomberg Barclays US Corporate High Yield Index.
- The 10-year US Treasury yield has risen considerably since the start of the year. It’s up to 1.09% from 0.92% at the end of December.
- Oil prices continued their climb higher in the first few weeks of the year, with West Texas Intermediate Crude trading at approximately $54 as of January 20.
- Bitcoin’s incredible rally, which started in mid-December, saw the price at one point double to over $40,000 (in early January). There’s been a pullback recently, with trading at approximately $35,000.
- Per Bloomberg consensus estimates, the S&P 500 is expected to deliver 2021 earnings-per-share of $165, a marked improvement from 2020. The same is true globally, with the MSCI World Index expected to deliver $126. That would leave US stocks trading at about 23.3 times earnings and global stocks at about 21.6 times.
Scott Krauthamer is Global Head of Product Management and Strategy at AB. Jonathan Berkow is Senior Quantitative Research Analyst and Alternative Data Lead for Equities at AB.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to change over time.