The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Fed Chair Powell’s forthcoming Congressional Testimony on monetary policy later this month assumes greater importance compared to recent years due to the recent dovish tilt in policy posture following communication errors in 2018.
Financial market volatility may have adversely affected animal spirits in the real economy, an outcome which the Federal Open Market Committee (FOMC) seeks to avoid, but members will still be open to accusations that they capitulated to pressure from financial markets.
Accepted proxies for corporate animal spirits in the real economy indicate moderation over the past 12 months even before Q4’s market turbulence, but current levels are still far from disastrous and hitherto do not suggest a total cessation in risk- taking activity.
Supply-side responses in the labour market over the 12-months, notably a rise in the participation rate for prime aged workers, have reduced the downward pressure on the unemployment rate, thereby enabling the Fed to embrace its patient policy approach.
The FOMC will retain their dovish tilt towards policy conduct until March, but, thereafter, the tone of incoming economic data, notably inflation, will ultimately determine the direction of the next change in the federal funds rate and its timing.
There is rising discussion about the probability of whether we will see a deal between the US and China to prevent a full blow trade war by March 1. We wanted to give you our assessment and its many layers.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Fed Chair Powell’s forthcoming Congressional Testimony on monetary policy later this month assumes greater importance compared to recent years due to the recent dovish tilt in policy posture following communication errors in 2018.
Financial market volatility may have adversely affected animal spirits in the real economy, an outcome which the Federal Open Market Committee (FOMC) seeks to avoid, but members will still be open to accusations that they capitulated to pressure from financial markets.
Accepted proxies for corporate animal spirits in the real economy indicate moderation over the past 12 months even before Q4’s market turbulence, but current levels are still far from disastrous and hitherto do not suggest a total cessation in risk- taking activity.
Supply-side responses in the labour market over the 12-months, notably a rise in the participation rate for prime aged workers, have reduced the downward pressure on the unemployment rate, thereby enabling the Fed to embrace its patient policy approach.
The FOMC will retain their dovish tilt towards policy conduct until March, but, thereafter, the tone of incoming economic data, notably inflation, will ultimately determine the direction of the next change in the federal funds rate and its timing.
There is rising discussion about the probability of whether we will see a deal between the US and China to prevent a full blow trade war by March 1. We wanted to give you our assessment and its many layers.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
There is rising discussion about the probability of whether we will see a deal between the US and China to prevent a full blow trade war by March 1. We wanted to give you our assessment and its many layers.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
There is rising discussion about the probability of whether we will see a deal between the US and China to prevent a full blow trade war by March 1. We wanted to give you our assessment and its many layers.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Korean overseas shipments are falling and so are export prices. Manufacturing inventory to shipment ratios are soaring and the sector itself has been flirting with recession for months now. Corporate profits remain healthy but not for long. With minimum wages slated to rise 54% between 2017 and 2022 and corporate tax rates having already moved higher, there are few upsides for Korean companies. We expect the investment cycle to remain subdued and for companies to accelerate the move abroad to lower cost manufacturing hubs. The government’s ‘income-led growth’ strategy will boost domestic consumption temporarily at best. The growth outlook is dim. Underweight Korean equities.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
UK monthly GDP disappointed all expectations by falling 0.4% m-o-m in Dec-18, which trimmed 4Q18 to 0.2% q-o-q. IP weighed most, mainly owing to ongoing car manufacturing issues, but was not the source of surprise.
Services remained resilient overall in the PMI-comparable areas with 0.55% q-o-q growth. Government and non-retail distributive trades were weaker, though.
Construction’s 2.8% contraction caused most of the surprise. Repairs and new private housing were weakest, and both are prone to positive payback. However, 1Q18 GDP growth is now tracking a low 0.3% q-o-q, in my view.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
Campaigning is underway in the Democratic Party’s lengthy ‘primary’ process for determining a 2020 presidential nominee. Polls suggest that ousting President Donald Trump is the foremost priority for most supporters of the party. Relative to past elections, the party boasts an extraordinarily diverse and energetic field of declared and potential contenders. Meanwhile, the president is clearly vulnerable.
Much depends, however, on whether the eventual challenger combines relatively centrist economic views with a persona that can bridge America’s yawning cultural divide. Because of the country’s anachronistic electoral‑college system, a nominee remote from the mainstream could alienate independents in ‘swing states’ and inadvertently aid Trump. Attention is therefore focusing on the questions of who can beat Trump – and how.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
UK monthly GDP disappointed all expectations by falling 0.4% m-o-m in Dec-18, which trimmed 4Q18 to 0.2% q-o-q. IP weighed most, mainly owing to ongoing car manufacturing issues, but was not the source of surprise.
Services remained resilient overall in the PMI-comparable areas with 0.55% q-o-q growth. Government and non-retail distributive trades were weaker, though.
Construction’s 2.8% contraction caused most of the surprise. Repairs and new private housing were weakest, and both are prone to positive payback. However, 1Q18 GDP growth is now tracking a low 0.3% q-o-q, in my view.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
The BoE MPC was unanimous in voting for no policy changes in Feb-19, as widely expected. Hawkish pressures remain in the Bank’s forecast, but the policy option value of a delay is high enough to tolerate them until after EU withdrawal.
Downgrades to the Bank’s demand forecasts were surprisingly significant given the PMIs bias to overreact to uncertainty. Allaying those concerns is likely to be too difficult to do in time for a May-19 rate hike.
I now expect the BoE to hike Bank rate to 1.0% in Aug-19, assuming a smooth exit from the EU in the interim. The data should seem better than the Bank fears by then, to the extent that the disinflationary effect of GBP appreciation is offset.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
UK monthly GDP disappointed all expectations by falling 0.4% m-o-m in Dec-18, which trimmed 4Q18 to 0.2% q-o-q. IP weighed most, mainly owing to ongoing car manufacturing issues, but was not the source of surprise.
Services remained resilient overall in the PMI-comparable areas with 0.55% q-o-q growth. Government and non-retail distributive trades were weaker, though.
Construction’s 2.8% contraction caused most of the surprise. Repairs and new private housing were weakest, and both are prone to positive payback. However, 1Q18 GDP growth is now tracking a low 0.3% q-o-q, in my view.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
When China’s fourth quarter GDP numbers were released in January, predictably, Bloomberg led with “China posts weakest growth since 2009” headline. The fact that the number was still 6.4% YoY, good by almost all standards, was given little attention. Being fickle, we immediately turned to the nominal GDP series – which the media continue to ignore completely – only to find that, on a quarterly annualised basis, the fourth quarter marked an acceleration in growth, from 8.5% annualised in 3Q18 to 9.3% annualised in 4Q18 (YoY it dipped to 9.2% from 9.5% in the third quarter).
UK monthly GDP disappointed all expectations by falling 0.4% m-o-m in Dec-18, which trimmed 4Q18 to 0.2% q-o-q. IP weighed most, mainly owing to ongoing car manufacturing issues, but was not the source of surprise.
Services remained resilient overall in the PMI-comparable areas with 0.55% q-o-q growth. Government and non-retail distributive trades were weaker, though.
Construction’s 2.8% contraction caused most of the surprise. Repairs and new private housing were weakest, and both are prone to positive payback. However, 1Q18 GDP growth is now tracking a low 0.3% q-o-q, in my view.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
