The Stories Behind The Earnings
Delving into the narratives of company earnings and what they mean for the economy.
The last month has been data overload. A huge range of corporate announcements and global economic data points have come together so we can sit down and read the tea leaves. Clear recurring trends are threading through the data but to keep things simple I’ve selected three core themes that I believe explain what’s happening and more importantly, what could happen. The themes I’ve observed are the toppy markets, the longevity of pressure and the failings of demand-oriented politics. Like most things economics and markets, these themes don’t make a whole lot of sense as standalone items. Pull them together though and it paints a clear picture of a society that has borrowed heavily from the future to survive the present day. Whether that be earnings and purchases that have been brought forward or debt taken on for stimulus, we have pushed hard into the future and now, for any semblance of future economic growth, we need policymakers and businesses to embrace creative destruction and change.
Demand Oriented Politics — The Supply of Hospital Beds
Working backwards through the core themes and tapping into the articles headline image is the nature of demand-oriented politics. The global response to the pandemic has been largely reassuring with governments around the world stepping up to the plate and looking out for the welfare of their people. However, they all seem to miss the crucial point. Their focus on hospital capacity and welfare has been solely oriented on reducing the demand on the healthcare system, but there’s also the supply side. Why are governments typically failing to do anything about the supply of hospital beds?
There’s available resources, capacity and policies that could be implemented to rapidly increase the supply of both beds and staff and increase healthcare capacity. If you’re worried about shortages and capacity limits then increase your capacity. The focus on reducing demand for healthcare by using lockdowns, vaccines and other initiatives is okay but it is only one side of the equation. The reason this is so significant is because of the massive ramifications demand-oriented politics have on economic…