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Jens Nordvig

@jnordvig

Oct 1, 2020 • 4 tweets • 1 min read • Read on X

The most important chart of 2020 continues to evolve. We had the incredible situation that incomes spiked in a depression, because government transfers were so big. Now that transfers are declining, incomes are coming down, but spending is still on an uptrend via past savings.

This is why the fiscal stimulus debate remains the hottest issue of the day, as well as more strategically. The cut in Federal unemployment subsidies are feeding directly into this. So that piece is key, although maybe the aid for states is what the negotiation is more focused on

@TheStalwart

2020 is not like any other year. The aggressiveness of fiscal policy, in the US and globally, is different. And the interplay between fiscal policy & QE is also different. "FisQEl Policy", if you will... (as opposed to the pure asset swap QE of the 2008-2014 period).@TheStalwart

White line is 'personal disposable income, SAAR', yellow line is 'personal spending, SAAR'

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Jens Nordvig

@jnordvig

Mar 4

Here are some basic observations about why the current US tariff policy plans are probably the absolute worst case scenario for US growth...

The cumulative tax effects are very large, and it is a complex system, hard to administer and entailing costly uncertainty.

THREAD

First,

Hitting the most integrated cross-border supply chains, at the core of US manufacturing, will entail a severe hit too US growth.

The tax effect of USMCA tariffs alone are > $200bn

(USCMA tariffs = ‘own goal’)

Second,

We are heading down a path of a complex set of individual tariffs, still ripe for circumvention (as not global). We think 8-10 different tariff pushes are now likely.

Here is a list of key proposals, some over-lapping (not including the agricultural-tariffs, that were added to the list yesterday)

Read 8 tweets

Jens Nordvig

@jnordvig

Feb 21, 2024

Nvidia $NVDA is hardly a cheap stock. But you often hear the comparison to Cisco $CSCO in the bubble. Is that fair?dot.com

Here are the (most) basic Cisco stats from 1997-2002.

The stock peaked in 2002 at 23 x Revenue
- margin was 64%
- rev. growth was 55%

Nvidia is trading at 27 x Revenue (more expensive than Cisco at the peak)

BUT
- margin is at 73%
- rev growth is at 126%

Read 5 tweets

Jens Nordvig

@jnordvig

Dec 16, 2023

For those thinking that the inflation experiences in the 1970s and the 1980s are instructive to this cycle...

Just a few background charts...

(mini-THREAD I guess)

The US economy is way more open. Hence, a lot of price dynamics are a function of the global economy, not just what is happening at home

imports to GDP were just 5% in the early 1970s, for example. Now >15% of GDP...

Unions played a much bigger role in the economy (>20% in the 1970s vs <10% now), and wage growth will therefore not be determined in the same way

Read 7 tweets

Jens Nordvig

@jnordvig

Dec 12, 2023

Everybody knows the details of US used car prices, the technicalities of the rent calculation, and even the oddities around obscure CPI components such as medical services...

but perhaps it is better to look at the big picture (global trends and China)...

- just a few of charts

The trend in global core inflation is almost back to normal (chart above)

And when you look at China, you think; should we not worry about deflation?

Headline CPI is as negative as in the covid shock, and almost as negative as in the CFC shock

And when you look at the latest China data, things are getting worse (assuming that you do not like deflation)

Despite the re-opening in 2023, the Chinese economy is observing greater deflationary effects, with momentum getting incrementally more severe in recent months.

Read 5 tweets

Jens Nordvig

@jnordvig

Nov 29, 2023

The higher for longer narrative is looking increasingly stale

(a few big picture charts)

First, the global trend in core inflation momentum is very clear. The worst is certainly behind us...

Second, while some economies have shown greater resiliency to higher rates than expected, global credit is very weak, especially vs 2022, but also vs pre-covid trend.

Read 9 tweets

Jens Nordvig

@jnordvig

Nov 26, 2023

I spoke this weekend at the Euro conference hosted by @AlbertoBagnai in Pescara, Italy (along with @EuroBriefing @borghi_claudio and others)

A few key points from my speech...

The Euro-crisis climaxed about 10-years ago, and the challenges for the Eurozone have been hotly debated since

Since the Euro-crisis (2010-2013) there have been steps towards more integration on a number of fronts:

- NextGenerationEU has facilitated temporary fiscal transfers.
- More active CB policy (QE, PEPP etc) entailed more support for peripheral bonds

Read 12 tweets

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