Chief Economist, Heteronomics

Phil Rush

Chief Economist

Heteronomics

Heteronomics represents a different kind of economics. We believe analysis should delve into the details of what is really going on, rather than using overly simplistic assumptions to quick-sell stories. Independence from myopic institutional pressures allows us to focus on the realities underlying your asset allocation decisions, without the conflicts of the old market structures. Heteronomics targets the themes driving UK asset prices, offering the benefits of depth, independence and ultimately price.

UK-centric macro research

Macroeconomics

<ul>
<li>UK GDP growth increased to 0.4% q-o-q in the ONS’s first estimate of Q2, in line with my forecast but 0.1pp above the consensus. Services didn’t grow as fast in August, but the July fall was trimmed along with volatility around the post-Brexit trend.</li>
<li>This outcome exceeded the BoE’s forecast from August but was probably in line with what they expected ahead of the release. It at least presents no reason to abort the rate hike widely expected for November, including by me.</li>
</ul>UK Q3 GDP exceeded the…


UK GDP growth increased to 0.4% q-o-q in the ONS’s first estimate of Q2, in line with my forecast but 0.1pp above the consensus. Services didn’t grow as fast in August, but the July fall was trimmed along with volatility around the post-Brexit trend.
This outcome exceeded the BoE’s forecast from August but was probably in line with what they expected ahead of the release. It at least presents no reason to abort the rate hike widely expected for November, including by me.
UK Q3 GDP exceeded the…

FLASH: UK GDP Acceleration Leaves BoE on Track

Public Relations and Social Media Manager, Dechert LLP

Peggy Heffner

Public Relations and Social Media Manager

Dechert is a global specialist law firm

Dechert LLP

Dechert is a global specialist law firm.
Focused on sectors with the greatest complexities, legal intricacies and highest regulatory demands, we excel in delivering practical commercial judgment and deep legal expertise for high-stakes matters.

Our work is widely recognized. We have 20 standout practices noted by Chambers Global, including global-wide rankings for arbitration, corporate investigations, anti-corruption, investment funds and life sciences. Named Antitrust Team of the Year, Chambers USA commends our “accomplished group” as “routinely sought after to handle some of the most significant litigation and transactions in the antitrust world.” 

In an increasingly challenging environment, clients look to us to serve them in ways that are faster, sharper and leaner without compromising excellence. We developed a first-of-its kind legal project management department, which uses technology, people and processes to drive efficiency and deliver value for our clients.

We are innovators. Dechert ranked #7 in the Financial Times’ Top North American Innovative Law Firms. Financial Times also recognizes us among the Top European Innovative Law Firms and highly commends World Compass, our marketing compliance service, which offers investment firms advice in more than 100 jurisdictions.

Thematic (Sector/Industry)

The UK investment management industry is, from a variety of perspectives, an important industry. With the Brexit clock now ticking, is there huge uncertainty ahead or is the industry largely secure? Can investment managers get on with their business or should they put their plans on hold for the next 23 months until the future becomes clearer?There are “experts” pointing in both directions. This article examines sources of income for UK investment managers to establish the extent of any risk and will also consider the position of investment managers in the U.S.

The UK investment management industry is, from a variety of perspectives, an important industry. With the Brexit clock now ticking, is there huge uncertainty ahead or is the industry largely secure? Can investment managers get on with their business or should they put their plans on hold for the next 23 months until the future becomes clearer?There are “experts” pointing in both directions. This article examines sources of income for UK investment managers to establish the extent of any risk and will also consider the position of investment managers in the U.S.

UK Investment Managers: Any Reason to Be Frightened by Brexit? A Legal Update from Dechert

<ul><li>The BoE’s Inflation Report delivered a dovish surprise with its downgraded inflation forecasts, but the GDP growth side was scarcely touched. Exports are assumed to offset slightly weaker consumption, which seems overly optimistic.</li><li>A rapid recovery in wage growth continues to be forecast, despite the persistent disappointment. A flatter Phillips curve may be partly to blame. If the BoE adopts a flatter relationship, tolerance for temporary inflation overshoots would rise.</li><li>My view remains more dovish than current MPC guidance, but also slightly more hawkish than prevailing market pricing, including around relative neutral rates.</li></ul>

The BoE’s Inflation Report delivered a dovish surprise with its downgraded inflation forecasts, but the GDP growth side was scarcely touched. Exports are assumed to offset slightly weaker consumption, which seems overly optimistic.A rapid recovery in wage growth continues to be forecast, despite the persistent disappointment. A flatter Phillips curve may be partly to blame. If the BoE adopts a flatter relationship, tolerance for temporary inflation overshoots would rise.My view remains more dovish than current MPC guidance, but also slightly more hawkish than prevailing market pricing, including around relative neutral rates.

<ul><li>The government’s Brexit timeline appears to be inherited from Brussels, where Brexit is still considered a two-stage process. Article 50 is more about a Withdrawal Treaty than what is next, leaving a role for a transitional period.</li><li>Disentangling from the EU requires tying off financial commitments to the EU and what rights citizens and businesses enjoy. The Council leads, the Commission deals with details and the Parliament provides approval.</li><li>Financial commitments to the EU Budget cannot be ruled out in ‘solidarity’ and certainly not in support for EU programmes. Exit from the EIB can be done in a few ways. All contingent liabilities should end, without much contention.</li><li>Rights of establishment are legally protected until the treaty is terminated unless negotiated otherwise. Migrants’ legal position is particularly problematic, amid different national experiences of flows and demographics with many grey areas.</li></ul>

The government’s Brexit timeline appears to be inherited from Brussels, where Brexit is still considered a two-stage process. Article 50 is more about a Withdrawal Treaty than what is next, leaving a role for a transitional period.Disentangling from the EU requires tying off financial commitments to the EU and what rights citizens and businesses enjoy. The Council leads, the Commission deals with details and the Parliament provides approval.Financial commitments to the EU Budget cannot be ruled out in ‘solidarity’ and certainly not in support for EU programmes. Exit from the EIB can be done in a few ways. All contingent liabilities should end, without much contention.Rights of establishment are legally protected until the treaty is terminated unless negotiated otherwise. Migrants’ legal position is particularly problematic, amid different national experiences of flows and demographics with many grey areas.

Japan TMT Analyst

Pelham Smithers

Market Intel on Asian Tech with a Japan focus

Pelham Smithers Associates

Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods. 

Research is provided by the following:
Pelham Smithers: Macro, consumer electronics, telecoms & pharma
Joel Scheiman: Electronics materials / components
Julie Boote: Autos
Will Nestuk: Capital goods, machinery & transportation equipment parts
Thao Nguyen: eCommerce, internet content, marketing & advertising

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on demand and, separately, on potential supply. The longer term one will depend largely on the policy response. Any decline in demand can in principle be offset by a lower exchange rate or by fiscal or monetary stimulus. A reduction in potential supply can only be offset, after a delay, by increased investment. This is therefore the key challenge and policy success will be determined by the extent to which investment is stimulated and adequate long- term growth thereby assured. In addition, there is also likely to be a reduction in living standards through a deterioration in the terms of trade as a result of weaker sterling, but this was in any event likely as the exchange rate appeared overvalued before the vote.

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on demand and, separately, on potential supply. The longer term one will depend largely on the policy response. Any decline in demand can in principle be offset by a lower exchange rate or by fiscal or monetary stimulus. A reduction in potential supply can only be offset, after a delay, by increased investment. This is therefore the key challenge and policy success will be determined by the extent to which investment is stimulated and adequate long- term growth thereby assured. In addition, there is also likely to be a reduction in living standards through a deterioration in the terms of trade as a result of weaker sterling, but this was in any event likely as the exchange rate appeared overvalued before the vote.  

United Kingdom

The FTSE 100 Index is a capitalization-weighted index of the 100 most highly capitalized companies traded on the London Stock Exchange. The equities use an investibility weighting in the index calculation. The index was developed with a base level of 1000 as of December 30, 1983. 

UKX Index (UKX INDEX)

FLASH: UK GDP Acceleration Leaves BoE on Track

UK GDP growth increased to 0.4% q-o-q in the ONS’s first estimate of Q2, in line with my forecast but 0.1pp above the consensus. Services didn’t...

Phil Rush

UK Investment Managers: Any Reason to Be Frightened by Brexit? A Legal Update from Dechert

The UK investment management industry is, from a variety of perspectives, an important industry. With the Brexit clock now ticking, is there huge...

Dechert LLP

BoE: Stuck in a Bullish Sweet Spot

The BoE’s Inflation Report delivered a dovish surprise with its downgraded inflation forecasts, but the GDP growth side was scarcely touched....

Phil Rush

Brexit: Withdrawal Treaty Processes

The government’s Brexit timeline appears to be inherited from Brussels, where Brexit is still considered a two-stage process. Article 50 is more...

Phil Rush

The UK Economy - After Brexit

The vote to leave the European Union will have both shorter and longer term impacts on the UK economy. There will be a shorter term impact on...

Pelham Smithers Associates