Daily Archives: October 26, 2020

Here is the second issue of the Macrospitality Brief, written jointly with Vanguélis Panayotis, CEO of MKG Consulting. By relying on a unique database and by combining a macroeconomic and sectoral (hotel industry) vision, our objective is to decipher and try to forecast the economic dynamics in France but also abroad. It will also be published on the Hospitality ON website.

In our previous note, we emphasized that French growth would rebound significantly in the third quarter following the end of the lockdown. This is essentially due to an increase in household spending, which benefited the tourism sector especially during the summer vacations. Nevertheless, as we also pointed out, the economic recovery showed signs of running out of breath from mid- August onwards following renewed concern about the health situation and the sluggish demand observed by many companies operating in the service sector. The latest figures for September confirmed our fears of a downturn in activity for the end of the year. France has been subject to new restrictions (such as a mandatory quarantine when returning home) imposed by various European countries such as the United Kingdom, Belgium and Germany, but has also been forced to tighten the rules in several key urban areas such as Marseille and Paris. These measures have already led INSEE to adjust downwards (from +1% to 0%) its growth prospects for the 4th quarter. However, further downward revisions are likely to occur in a context where companies do not seem to be able to become the new engines of the recovery phase, due to growing uncertainty about the short- and medium-term outlooks (new epidemic wave, wave of bankruptcies, Hard Brexit, US elections…).


After encouraging results during the summer vacations (July/August), the first available data for September turned out to be disappointing, especially for the service sector. Indeed, the monthly index released by Markit1 fell by 4 points in September to 47.5, its first decline since May. According to the report, “Underlying data revealed challenging conditions in five of the six monitored subsectors, with the exception being a sharp output expansion in the Financial Intermediation category“. In this context, the composite index also slipped below the expansion threshold of 50, reaching 48.5 (the lowest since May). This turnaround can be explained by the increase of new confirmed cases of Covid-19 and the gradual tightening of restrictive measures in France and Europe.
A report published by the Conseil d’Analyse Economique2 (CAE) on October 12 confirmed this turnaround in the restaurant and leisure sectors.


Source: Conseil d’Analyse Economique Report (10/12/2020) – Based on data from Crédit Mutuel Alliance Fédérale

This phenomenon has also been observed through the figures we have for the hospitality sector, with a relapse of the RevPAR in September in all European countries. France, whose recovery had been particularly strong over the summer, was no exception: it lost its lead and aligned itself with Germany.


(Evolution in % compared to the same month in 2019, expressed in built rooms)

Sources: MKG Consulting, christophe-barraud.com

At the French and European level, the hotel industry therefore experienced a very poor September, which is quite an issue considering this month usually represents 11.3% of hotels’ annual turnover. The combined presence of business customers mobilizing for the back-to-business season and leisure customers prolonging the pleasure of summer normally makes it the second most important month of the year for the sector. The economic impact of the slowdown was thus significant as early as September.

This trend is set to continue, as individual business customers logically limit their travel in accordance to health regulations, while events are at a standstill and will remain so for a long time, as highlighted in Paris by the cancellation of the Agriculture Show (February-March 2021) and in Lyon by the postponement of the SIRHA from January to June 2021.


On the economic front, despite this disappointing month of September, the GDP for the 3rd quarter can be expected to mark an unprecedented rebound (around +15% on a quarterly basis). However, as we have already mentioned, we are entering a critical period where the risk of a relapse in activity is very high. In this regard, we may note that, at the time of the publication of its economic note3 of October 6, INSEE chose to revise its growth forecast for the 4th quarter down to 0% (from +1% previously).
At the same time, many bankruptcies are already expected for October. As Les Echos4 pointed out, «since August 24, companies that cannot pay their bills have 45 days to declare themselves in default at the Commercial Court», which should result in a rise in business failures from October onwards and thus an increase in unemployment.


(Evolution in % compared to the same weekday in 2019)

Sources: christophe-barraud.com, MKG Consulting


(Evolution in % compared to the same day of the week in 2019)

Sources: christophe-barraud.com, MKG Consulting

More recently, the announced curfew, involving the closing of bars and restaurants from 9pm in the Ile-de-France region and in 8 major cities, should also weigh on tourist activity. The case of Marseilles, where the restrictions applied to bars and restaurants have been fluctuating in recent weeks, offers some insight into prospects in the areas concerned: The recovery of summer activity, which had been strong in Marseille, was thus very quickly stopped by announcements of restrictions affecting bars and restaurants, making the city an unintentional textbook case. The observation is that after a few weeks, the gap between the trend in Marseilles and the national standards in the regions shows a specific RevPAR loss peaking at -17% during the early closing period (then defined as 11pm), and at -23% during full shutdown of restaurants. The specific impact of the curfew in the cities concerned can therefore be estimated as an additional cut (relative to standards in other Province areas) by around 20 percentage points of 2019 RevPAR5.

Consequently, the new restriction measures, applicable for at least 6 weeks, imply a relapse of activity in the concerned areas (more than 54 departments) and, given their importance, at the national level. Likewise, other areas are likely to suffer from a similar fate in coming weeks, as the All Saints’ Day vacations are pushing tourists to move to areas that have been spared so far, favoring the circulation of the virus. It should also be noted that the flash estimate of the PMI for the month of October6 showed a sharper contraction than in September (47.5 against 48.5 previously).


(Net change in reservations for November and December 2020 between 10/12 and 10/19/2020)

Sources: christophe-barraud.com, MKG Consulting

In a context where visibility will remain limited in the short term for companies due to other uncertainties, tied in particular to Brexit or the US elections, a contraction in the hotel business and more broadly in the services sector now seems to be the central scenario for the fourth quarter. Given the weight of services in the French economy, GDP growth will also contract, as the Minister of the Economy has already pointed out in his interview with Le Figaro7. This risk was already factored in by Bercy, the French economy and finance ministry, which forecasted a 10% drop in 2020 GDP, a figure that left room for a relapse in the 4th quarter.

Disclaimer : http://www.market-securities.com/disclaimer-2

2http://www.cae-eco.fr/dynamiques-de-consommation-dans-la-crise-les-enseignements-en-temps-reel-des-donnees-bancaires : Chart 7
5 This is a “specific” impact that must be added to the general trend in other areas; for example, if Income per available room dropped by 50% in the
provinces in cities not affected by curfew, then it would drop by about 20% + 50% = 70% in the concerned cities.

Vanguélis Panayotis

As an expert in the hotel and tourism industry, Vanguélis Panayotis is a recognized player in the sector and a leading observer of its transformation. He takes over the presidency of MKG Consulting in 2017, after having joined it in 2001, he supervises the teams of consultants as well as the development of operational and innovative tools, particularly those involving the monitoring of the sector’s activity. As a keen observer of the hotel and tourism industry, he regularly speaks at conferences and events to provide his expert insight on the sector’s figures, trends and prospects. He also advises key players in tourism and investment, as well as public organizations. At the same time, each year he organizes various think tanks for the profession (Global Lodging Forum, Paris Asset Forum >hospitality, Hospitality Awards, etc.).


According to the European Centre for Disease Prevention and Control, all European countries have crossed a key threshold of new coronavirus infections. Latest data showed that the countries have recorded cumulative 14-day infection totals higher than 20 per 100,000 inhabitants, considered an early alarm level by many health experts.


Source: European Centre for Disease Prevention and Control (data as of Oct. 25th)


Czechs will likely have to tighten #COVID_19 curbs again as cases surge – Prime Minister – Reutershttps://t.co/AESP7yTp9J

— Christophe Barraud (@C_Barraud) October 25, 2020



— Christophe Barraud (@C_Barraud) October 26, 2020


#Eurozone: Latest Restrictions Linked To #Covid_19 (An Update)
*Daily Summary: https://t.co/3IC6J5lxlbhttps://t.co/yMbqqvdOOn

— Christophe Barraud (@C_Barraud) October 18, 2020


1/ Point situation Covid en Europe : depuis 3 semaines, tout le continent passe au rouge.

Terminés les bons élèves allemands ou italiens, il n'y a plus de pays modèles. Il n'y a plus que des courbes exponentielles et un risque de passer tout le mois de novembre confiné. pic.twitter.com/itmCzsTTZU

— Vincent Glad (@vincentglad) October 25, 2020


1/21. Oct 26 to Nov 01 – #COVID19 Daily Epidemic Forecasting for 209 countries/territories.
21 countries analyzed in the thread.
Data: @ECDC_EU or https://t.co/lsAJmfF616 or https://t.co/YgpOxMJcyy
Dashboard: https://t.co/YTRsgEESvy
Powered by @ISG_UNIGE & @SDSCdatascience pic.twitter.com/MvMue2runA

— Antoine FLAHAULT (@FLAHAULT) October 25, 2020


Germany (data)

Germany reports 8,685 new coronavirus cases in latest update today https://t.co/6LLrc6j2jM

— ForexLive (@ForexLive) October 26, 2020


Spain (data)

(Fin de semana)

✔️ 19.199 sábado
✔️ 14.917 domingo

Se supera el máximo del fin de semana anterior con 12.362 positivos más

* Sin datos de Madrid, CLM ni La Rioja; ni CV el domingo https://t.co/DtgXsHW7En

— Miguel Ángel Reinoso (@mianrey) October 25, 2020

#Coronavirus: #Spain declares state of emergency to impose regional curfews – Euronewshttps://t.co/P75MzpfPyJ

— Christophe Barraud (@C_Barraud) October 25, 2020

1. Spain imposes national curfew from 11 p.m. to 6 a.m. amid rising virus cases. (Regional administrations have some leeway to tweak that timing slightly.) Just to make clear, 11 p.m. is relatively early in Spain! Dinner often starts at 10 p.m. or later. https://t.co/r3K0N2CSPB

— Jeannette Neumann (@JENeumann) October 25, 2020


France (data)

#FRANCE REPORTS 52,010 NEW #CORONAVIRUS CASES IN PAST 24 HOURS (New record high; v 45,422 prior and 29,837 last Sunday)
*Positivity Rate: 17.0%❗ (v 16.0% prior).
*Santé Publique France: https://t.co/bZLT3Rguuz pic.twitter.com/dcACJkop0k

— Christophe Barraud (@C_Barraud) October 25, 2020

Moyenne des cas #COVIDー19 détectés (Source bilan SPF by @Fabien_L)

➡️52010 cas (74,31% vs j-7)
➡️Moyenne à 34496 (49,88% vs j-7⬇️)

PS : les bilans SPF pointent les cas à réception du résultat du test alors que SIDEP prend en compte la date du prélèvement. SIDEP a 3j de retard. pic.twitter.com/jhkQqixmOx

— Guillaume Saint-Quentin (@starjoin) October 25, 2020

Et depuis la mi-mars pic.twitter.com/x8Ny3TD0Rc

— Germain Forestier (@gforestier) October 25, 2020

Les données à maille fine sont également disponibles avec un focus chez les plus de 65 ans.

Évolution de l’incidence en France du 29/09 au 21/10 chez les plus de 65 ans pic.twitter.com/sXXmFX9tHB

— Germain Forestier (@gforestier) October 25, 2020

[THREAD]#MétéoCovidFrance du 24 octobre


France Métropolitaine :
1637 entrées ⬆️ J-7 (964)
Moyenne 1652,29 ⬆️ J-1 (1556,14)

30 entrées ⬆️ J-7 (22)
Moyenne 20,86 ⬆️ J-1 (19,71)

Graph sur toute la période et les 120 derniers jours

La suite ⤵️ pic.twitter.com/ZFd6WL3tau

— Guillaume Saint-Quentin (@starjoin) October 24, 2020

Mise à jour région par région du nombre total de personne hospitalisé et en Réanimation en France Métropolitaine + DOM.

16454 Hospitalisations
[+817 ]
15 en hausse
1 stable
2 en baisse

2575 Réanimations
[+84 ]
13 en hausse
4 stable
1 en baisse pic.twitter.com/Tz7wkhlsFr

— Fabien_L (@Fabien_L) October 26, 2020

Avec une moyenne 153 décès par jour depuis 7 jours, la #COVID19 est désormais la première cause de mortalité quotidienne en France, loin devant l’infarctus du myocarde (1ère cause de mortalité avec 90 décès par jour en moyenne). pic.twitter.com/9UkjtmCuDV

— Antoine FLAHAULT (@FLAHAULT) October 25, 2020


Italy (data)

Ancora un balzo nei contagi: 21.273 nuovi casi (con meno tamponi). Le vittime sono 128: il bollettino https://t.co/pJtrQ6E0aZ

— Corriere della Sera (@Corriere) October 25, 2020

#Italy orders bars and restaurants to close early as #COVID rates surge – Reuters
*Italy on Sunday ordered bars and restaurants to close by 6 p.m. and shut public gyms, cinemas and swimming pools.https://t.co/UUk5bWacrM

— Christophe Barraud (@C_Barraud) October 25, 2020


Daily New Confirmed Cases (7-day moving average)

*Note: Data can’t be directly compared to lockdown period amid methodology change and increasing frequency of tests (see below).


Daily New Tests (7-day moving average)


Positivity Rates (7-day moving average)


Daily New Confirmed Deaths (7-day moving average)


U.S. sees highest number of new #COVID_19 cases in past two days – Reutershttps://t.co/iy7srMqwPu

— Christophe Barraud (@C_Barraud) October 25, 2020

U.S. COVID-19 aid bill talks continue, Pelosi says https://t.co/N2yId0E9Dh pic.twitter.com/qi2rNL222u

— Reuters Business (@ReutersBiz) October 25, 2020

Fauci says findings on a potential #coronavirus vaccine are expected by early December but widespread availability will come later – CNNhttps://t.co/ZCfIse7pTH

— Christophe Barraud (@C_Barraud) October 26, 2020

Pelosi, White House Say Each ‘Moving the Goalposts’ on Stimulus – Bloomberghttps://t.co/SdnwI470a1

— Christophe Barraud (@C_Barraud) October 26, 2020

US early voting hits 58.6 million, surpassing all of 2016 early and absentee voting – The Hillhttps://t.co/ao4gBM7hDa

— Christophe Barraud (@C_Barraud) October 26, 2020

Barrett moves step closer to Supreme Court seat https://t.co/IPVdkuaNpW

— Financial Times (@FT) October 25, 2020


Follow our live updates on the coronavirus here:
— Tokyo reports 108 new infections
— India reports 45,148 fresh cases
— South Korea confirms 119 new infectionshttps://t.co/2DiFJk4hlt

— Nikkei Asia (@NikkeiAsia) October 26, 2020

#China Tests Millions in #Xinjiang After Asymptomatic Cases Found – Bloomberg
*All 137 cases are asymptomatic, health authorities sayhttps://t.co/j6AQtis8lE

— Christophe Barraud (@C_Barraud) October 26, 2020

#China’s New Growth Plan May Push Economy Past U.S. Within Decade – Bloomberghttps://t.co/qsJlwYDoap

— Christophe Barraud (@C_Barraud) October 26, 2020

South Korea has probably emerged from a recession and is among the quickest to shake off the impact of the coronavirus pandemic https://t.co/zq4QOJJ7qA pic.twitter.com/1ug5hhWJ4C

— Sam Kim (@samkimasia) October 26, 2020

South Korea accuses Chinese President Xi Jinping of distorting history in a speech he made on the Korean War https://t.co/rv4SJdEBEy

— Bloomberg Asia (@BloombergAsia) October 26, 2020


⛴️ Post-Brexit trade talks extended to Oct. 28
Brexit, Covid and climate collude to raise UK food orices
China’s new growth plan may push economy past the U.S. within a decade
Here’s a rundown of your top economic news today https://t.co/lnI31DhB0y

— Bloomberg Economics (@economics) October 26, 2020

#Europe #Covid_19: Summary (October 26th)

*Focus on #Germany, #Spain, #France, #Italy

➡ Latest restrictions: https://t.co/yzyFhKzAmW

HT @vincentglad, @FLAHAULT, @ForexLive, @mianrey, @gforestier, @starjoin, @Fabien_L, @Corriere https://t.co/XkYOhdGbSo

— Christophe Barraud (@C_Barraud) October 26, 2020

All eyes will be on a planned rally at the German Embassy on Monday.https://t.co/7RfcDChz1z

— Nikkei Asia (@NikkeiAsia) October 25, 2020

Oxford #Covid #vaccine trials offer hope for the elderly – FThttps://t.co/xlhzil96Xu

— Christophe Barraud (@C_Barraud) October 26, 2020

OUCH! SAP shares collapse after new lockdowns force cuts to revenue. Previous outlook incorrectly ‘assumed economies would reopen’ German software maker also delays longer-term financial goals https://t.co/bQQAZn0zTo pic.twitter.com/cOAJ3mrrYP

— Holger Zschaepitz (@Schuldensuehner) October 26, 2020

Turkey’s lira drops below the key level of 8 per U.S. dollarhttps://t.co/73J641DsTO pic.twitter.com/5VQEmpWUc8

— Bloomberg Middle East (@middleeast) October 26, 2020

… and a companion chart. https://t.co/bi66I2vKK5 pic.twitter.com/BJqT6XGB0m

— John P. Hussman (@hussmanjp) October 25, 2020

Hedge Funds are "all-in" Stocks (updated):

GS PB data shows Equity LS Gross & Net leverage now the highest on record – moving off the chart.

These are major imbalances… increasing the risk of a deleveraging event.

h/t @themarketear pic.twitter.com/2flRjMljtU

— Macro Charts (@MacroCharts) October 23, 2020

Emini liquidity remains dismal pic.twitter.com/iTsJP6Oahw

— zerohedge (@zerohedge) October 25, 2020

Hedge Funds are all-in the largest Total Commodities exposure in history.

"When all the experts and forecasts agree – something else is likely to happen." – Bob Farrell pic.twitter.com/TK8ZDG8hJ1

— Macro Charts (@MacroCharts) October 24, 2020

Good Morning from #Germany where the second corona wave w/record new infections shows first negative consequences in the real-time data. Germany is the biggest faller among the big4 European econs this week. Economic activity dropped 4ppt to 73% of normal levels. (via Jefferies) pic.twitter.com/8wiwNN6Yh1

— Holger Zschaepitz (@Schuldensuehner) October 22, 2020

– Prior revised lower from -1.6 to -1.7 pic.twitter.com/7KFJrepsxK

— Christophe Barraud (@C_Barraud) October 22, 2020

Germans’ demand for toilet paper is once again on the rise https://t.co/QzKUF28RaN

— Bloomberg Economics (@economics) October 22, 2020

Half of Europe’s Smaller Businesses Risk Bankruptcy Within Year – Bloomberg
*Link: https://t.co/bCZiYExMBf pic.twitter.com/07dPTY1YyQ

— Christophe Barraud (@C_Barraud) October 22, 2020

Peak polarization pic.twitter.com/NywmPHznuh

— zerohedge (@zerohedge) October 23, 2020

Fascinating chart from Deutsche' s @JimReid35. Even if the polls are as wrong as they were in '16, Biden on course to win FL (though only by 1%) MI WI PA AZ NH and NV. If as wrong as in '12, he wins NC, IA, OH and GA as well. pic.twitter.com/m2zMYLUQYm

— John Authers (@johnauthers) October 20, 2020

Summary Key Macro Events

A four-day meeting of the Chinese Communist Party’s top leaders begins Monday to deliberate a new five-year plan from 2021. By week’s end, they will likely have agreed a target for achieving high-income status by 2025 – Nikkei (26)

New Home Sales for September (26)

India will host the third edition of its so-called 2+2 ministerial dialogue with the U.S. – Nikkei (27)

Durable Goods Orders for September (27)

Consumer Confidence (Conference Board) for October (27)

BOJ Officials are widely expected to hold fire on Thursday (29)

European Central Bank president Christine Lagarde and other policymakers are set to meet on Thursday but analysts expect the ECB to keep its cards covered and the rates on hold. (29)

3Q GDP (1st estimate) (29)

CPI YoY for October (30)

3Q GDP (1st estimate) (30)

From Sunday, statisticians will conduct a household head count for China’s 7th national population census registration – Nikkei (1)




*It's The Busiest Week Of The Q3 Earnings Season!

*Results Are Due From:

-Gilead Science
-Exxon Mobil
-Ford pic.twitter.com/NyJhGqWa32

— Investing.com (@Investingcom) October 25, 2020

#earnings for the week https://t.co/lObOE0dgsr $AAPL $AMZN $MSFT $AMD $UPS $FB $SHOP $BA $HAS $PFE $SMPL $MMM $TWLO $GE $FSLY $PINS $NOK $TWTR $MRNA $CHGG $ETSY $SAP $CAT $LGND $FVRR $SPOT $GOOGL $LLY $GILD $RTX $TDOC $OSTK $V $ATVI $MA $XOM $ABBV $HCA $SHW $F $NVS $NRZ $MRK pic.twitter.com/6qEkIXEUcf

— Earnings Whispers (@eWhispers) October 24, 2020

Stock-market investors brace for busiest week of earnings in October’s final hurrah https://t.co/53I4uW8ROA

— MarketWatch (@MarketWatch) October 24, 2020



World Economy Gets Temperature Check Before U.S. Vote: Eco Week – Bloomberg
*Link: https://t.co/50o3ih0tbD pic.twitter.com/oxzJ0Yc3Xd

— Christophe Barraud (@C_Barraud) October 25, 2020

Your Week in Asia
— China plenum
— Ant IPO pricing
— Pompeo in Indiahttps://t.co/XL3nBdg1yg

— Nikkei Asia (@NikkeiAsia) October 25, 2020

Covid cases rise, Q3 earnings bonanza, US growth data https://t.co/FtEDirlO2x

— FT Economics (@fteconomics) October 25, 2020

The ECB meeting on Thursday will be dominated by discussions on the impact that the sudden resurgence of the pandemic could have on the recovery – and whether more stimulus is already needed https://t.co/zLU0T0GHax pic.twitter.com/6DoPeeYsNF

— Bloomberg Economics (@economics) October 25, 2020



Focus on Economic Calendar

Schedule for Week of October 25, 2020 https://t.co/zD0svCxGkl The key reports this week are the advance estimate of Q3 GDP and September New Home sales.

Other key indicators include Personal Income and Outlays for September and Case-Shiller house prices for August.

— Bill McBride (@calculatedrisk) October 24, 2020



Top 10 Macro/Financial Charts of the Previous Week – w43

⚠ Top 10 Macro/Financial Charts of the Week – w43 ⚠

HT @hussmanjp, @MacroCharts, @zerohedge, @Schuldensuehner, @economics, @johnauthershttps://t.co/BGqSrB5dyg

— Christophe Barraud (@C_Barraud) October 26, 2020


What happened in the World Economy last Week – in charts – w43 (Bloomberg)

What happened in the world economy this week – in charts https://t.co/brPJH5d9IV

— Bloomberg Economics (@economics) October 24, 2020

Equity Flows.

Updating this stunning chart from DB:

(1) Tech keeps getting non-stop record flows. Nearly $50Bn YTD.

(2) Incredible how there's *still* so little net buying in 8 key Sectors – a winner-take-all market driven by extreme investor preferences. pic.twitter.com/1vzho8bKiV

— Macro Charts (@MacroCharts) October 26, 2020

Keeping an eye on this. Pay close attention to the charts from my Oct 12 report. Will share more in the coming days. pic.twitter.com/DJay4ttkp5

— Macro Charts (@MacroCharts) October 26, 2020

Hedge Funds are nearing a record long 10Y vs. 30Y UST position. The spread in speculative positioning as a % of open interest is above 20% for the first time since Aug ‘07, & before that Oct ‘00. Worth tracking. pic.twitter.com/X2a7AaYKKj

— Julien Bittel, CFA (@BittelJulien) October 26, 2020

JPMorgan: "over 70% of the increase in number of US cases has been due to increased testing" pic.twitter.com/8g2W8CFegY

— zerohedge (@zerohedge) October 26, 2020

Home sale prices are chasing aggressive climb in list prices, as per @Redfin … former has jumped +11% y/y while latter has stayed elevated at +13% @DataArbor pic.twitter.com/qsi7B5NVK7

— Liz Ann Sonders (@LizAnnSonders) October 26, 2020