Global Business Week: The State of World’s Government Debt

The state of Financial markets & Economies, Weekly Charts, Business Trends & Statistics

Last Friday tuned out to be a perfect example of how bad news could become good news in financial markets. The DJIA and S&P 500 rose to record highs despite a huge miss on the April Nonfarm Payrolls (NFP) report —only 266k jobs were added to the U.S economy against the expectation of a million. The initial negative reaction in U.S futures reversed sharply higher with the opening of the market as investors took this as a sign that the Fed will remain accommodative with low-interest rates for a long time.

For the week, the Dow Jones and S&P 500 indexes closed at record highs, rising 2.7% and 1.2% respectively, but the Nasdaq ended lower for the third straight week, down 1.5%. Value stocks outpaced growth stocks for the week. Stocks of COVID-19 vaccine developers trended lower on Wednesday and Thursday after U.S. Trade Representative announced support for a waiver of intellectual property protections. Big Pharma & vaccine developers continue to present the case that waiving IP rights is not going to solve the supply chain problem.

The U.S dollar slumped toward the lowest level since February, while U.S. Treasuries fluctuated before ending mostly unchanged as 10-year yields briefly fell below 1.47% after the jobs data hit. The benchmark dollar index (DXY) closed just at 90.23. Next week’s economic calendar will be key with two important data releases which will help shape the short-term trend in the greenback — the latest U.S inflation numbers & retail sales data.

Cryptos are seeing a parabolic rise in Alt. coins. Dogecoin, a crypto that started as a joke, is currently changing hands as high as $0.68 cents, climbing 11,000% so far in 2021. But let’s leave the fate of the meme coin to Elon Musk, the so-called “Dogefather” and talk about the cryptos that have shown some utility. The drumbeat around Ethereum’s gains continues to get louder as the second-largest crypto continues to achieve one milestone after the other — crossing $3800 at the time of writing. Bitcoin’s dominance has now fallen below 45% as the crypto market cap inches towards $2.5 trillion.

Today’s featured infographic comes from Howmuch.net, visualizing the growing problem of national debt around the world. The visualization was created by taking 2021 debt to GDP ratios for each country around the world according to the International Monetary Fund (IMF). The COVID-19 pandemic significantly increased government debt around the world, with 3 countries now over 200% of debt to GDP and 32 over 100%. Japan still has the highest debt to GDP ratio in the world at 257%, which is significantly higher than other developed countries. While a handful of petro countries carry very little debt, including Kuwait (14%), Russia (18%) & Saudi Arabia (31%).

And finally, before moving on to some other statistics, here are the weekly & YTD numbers from various markets and different assets (Figure 1).

Figure 1

Which U.S generation is the most powerful?

In the inaugural Generational Power Index (GPI) for 2021, Visual Capitalist has attempted to quantify how much power and influence each generation holds in American society, and what that means for the near future. As it stands, the Baby Boomers (born 1946–1964) are America’s most wealthy and influential generation (Figure 2). But even the youngest Boomers are close to retirement, with millions leaving the workforce every year.

Figure 2

CME Ethereum Volume Quadruples

One of the factors pushing the price of Ethereum recently has been an increased interest in its futures. In terms of total USD trading volume, CME’s ETH futures reached $6.1 billion in April (up 302% since March). Meanwhile, CME’s BTC futures volume decreased by 10.3% to $53.3 billion (Figure 3). On aggregate (Ethereum + Bitcoin futures), volumes reached $59.4 billion, down 2.6%.

Figure 3

How Does the Bill and Melinda Gates Foundation Invest Its Money?

Bill and Melinda Gates have announced they are ending their marriage but will continue to work together at their Bill and Melinda Gates Foundation — launched in 2000, it is the largest private philanthropic organization in the United States. It has spent over $50 billion on global public health over the last two decades, including $1.75 billion on COVID-19 relief. Here’s a snapshot of how the foundation invests its money (Figure 4).

Figure 4

A Surge in Defi Assets

The total value locked in Defi assets has crossed $80 billion as we speak and there seems to be no dearth of interest in the novel segment of digital assets. The chart below (Figure 5) how various assets have ballooned ever since the beginning of 2020.

Figure 5

13-year High Equity Sentiment

While the equity markets have been choppy over the past two weeks despite robust earnings, investor optimism remains at record levels. Excessive optimism can be a contrarian indicator, too, so markets may remain a little frisky for the foreseeable future. As the chart below suggests (Figure 6), the equity sentiment is at its highest level in 13 years and there seems to be not let up in sight.

Figure 6

Minimum Tax Plan Support

IMF Managing Director Kristalina Georgieva not only backed the U.S idea for a global minimum corporate tax but also said she’s optimistic that a multinational agreement could come this year. She noted that the COVID-19 pandemic has provided a unique opportunity to remake the global tax system. She warned that a minimum tax rate is urgently needed to avoid the risk of a chaotic tax or trade war where everyone loses. She added it’s the only way to ensure firms pay sufficient taxes in the places they do business. With that in mind, here’s a look at the corporate tax rates, which have been on a decline globally since 1980 (Figure 7).

Figure 7

Demand for US Dollar Slips

The chart below (Figure 8) looks at the recent data release from a longer-term perspective. It shows that the share of US dollar assets in central bank reserves dropped by 12 percentage points, from 71 to 59%, since the Euro was launched in 1999 (top chart), although with notable fluctuations in between (blue line). Meanwhile, the share of the Euro has fluctuated around 20%, while the share of other currencies including the Australian dollar, Canadian dollar, and Chinese renminbi climbed to 9% in the fourth quarter (green line).

Figure 8

Market Humor: Commodities Streaking Ahead

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