There are no big themes dominating the news today. So it is a perfect time to hit a couple of themes with an economic and market theme approach. Let’s talk banks, Japanese trade, the currency wars and deflation.
I don’t have any links today, so I am going to go right into the daily piece here. Just 10 minutes ago, the US jobs numbers were released. Combined with the British composite PMI data earlier, the numbers present a rosy picture for the two economies. If the data continue like this, central bank governors will find it hard to keep the same level of policy accommodation in place.
The economic data out of the US and Spain yesterday were very good and support the idea that both of these economies are seeing recoveries that are accelerating. Some thoughts on the data below
This is an abbreviated post from our subscription series at Credit Writedowns Pro. The European data out today were not particularly good. We saw a deceleration in the eurozone economy, that when combined with the deceleration in German inflation, suggests that deflationary forces could still threaten a debt deflationary impulse in Europe if an exogenous shock hits the economy. The […]
Today’s links carry a widely-diverging set of opinions about the moral issues surrounding the situation in Ukraine. But since this is a finance site, I want to discuss the economic issues. I continue to believe the Ukrainian situation will have only a modest impact on the global economy unless war breaks out. Moreover, Europe’s trade linkages to Russia make sanctions a trickier subject for Europe than the US. Expect to see diverging views within NATO and no meaningful economic penalty as a result.
By Frances Coppola This chart caught my eye: It’s the GBP/USD exchange rate from 1915 to the present day. Accompanying this chart on Twitter was the comment “quite shocking though how much the pound has been devalued since 1945”. This is a fine example of the way in which economic indicators can be misinterpreted when the historical narrative underlying them […]
There have been two central bank actions in Asia to note. In Europe, two countries reported lower than expected inflation.
The events of the last week have made it very clear that Scottish independence would affect all of the UK. I have no vote in this referendum, but I definitely have an interest in its outcome.
The UK government this week ruled out any question of agreeing to a currency union with an independent Scotland. So where does this leave Scotland’s currency conundrum? And what about the banks? Scotland has two very large banks – RBS and HBOS. The majority of both RBS’s and HBOS’s business is in England & Wales.
Themes for today:
Commodities: soybean prices could fall due to increased supply. This would be troublesome for Argentina.
Emerging markets: Of the fragile five, India is looking better, Brazil is still a big concern.
Developed Markets: House price inflation makes France, the UK, Australia and Canada vulnerable to real economy shocks.
US: Consumers are only supporting 1-2% growth. Q1 will be weak. Inventory builds are still the big story.
– The big event today is the BOE’s Quarterly Inflation Report and the updated economic assessment and forward guidance; sterling is outperforming
– Carney indicated that the new forward guidance would look at a broader range of economic indicators, without being too specific
– Italian Prime Minister Letta was to announce a new coalition pact yesterday, but PD head Renzi withheld support
– Japan reported a dismal December machinery orders data, a proxy for capital investment
– China reported news that seemed, well, over the top
The investment climate has proven extremely difficult for investors to navigate. Fed tapering and better world growth was to lead to higher interest rates. Yet interest rates for the developed world have fallen sharply in recent weeks. We identify, discuss and assess nine event risks of global investors in the week ahead.