Global Macro


Quantitative tightening is coming, but policy will remain accommodative

BofA Global Research with the note: The December FOMC meeting minutes included a lengthy discussion of the timing and speed of Fed balance sheet shrinkage (quantitative tightening or “QT”). The broad message appears to be that QT will start sooner than it did in the previous tightening cycle, and proceed at a faster pace. Even


US inflation is yet to peak

Goldman Sachs with the note: Inflation trends: The core PCE price index rose 0.46% month-over-month in November to a new three-decade high of 4.68% year-on-year, and core CPI inflation rose to 4.96%. Core inflation was again boosted by rapid shelter inflation—which has run at the highest level since 1990 over the last three months—and another


2022 could be the year Tesla goes Teracap

Morgan Stanley with the note: Tesla reported 4Q unit deliveries roughly 15pct ahead of consensus, annualizing to over 1.2mm units BEFORE contribution from Austin and Berlin which we ultimately expect to be far larger plants than Fremont and Shanghai. 3key thoughts: It’s not just the unit beat, but the favorable economics from reducing the proportion


Top 12 global economic charts of 2021

Goldman Sachs’ Global Economics Analyst has released its top 12 charts of 2021. Below is the overview: The global economy recovered rapidly in 2021 as demand surged. Mass vaccinations and adaptation made growth less sensitive to infections although risk aversion to the virus remained high in Asia-Pacific for much of the year. Fiscal policy turned from


Singapore seals border to Australia

Only three months ago, Singapore was experiencing a massive surge in COVID cases that dwarfed anything Australia has experienced: This September outbreak produced a peak COVID death rate of only 2.5 people per million residents: Now with Omicron cases taking off, Singapore has sealed its border shut to Australia and 19 other nations included in


Joye: The zombie economy can’t last

Chris Joye at Coolabah with the note: The moral hazard of having central banks and treasuries constantly bail-out bad businesses since 2007 has led to the rise of “zombie firms” that have earnings that cannot cover the interest repayments on their debts. In the US, around 15-20 per cent of all listed businesses now meet


Gibraltar proves vaccination doesn’t stop COVID transmission

Anyone still clinging to the myth that the unvaccinated are responsible for spreading COVID, or that vaccination stops transmission, only needs to look at the 100% vaccinated British Overseas Territory of Gibraltar. Gibraltar’s vaccination rate is truly world-leading: Yet it is experiencing more cases per million than either the UK or USA: Accordingly, Gibraltar’s government


Inflation here today, gone tomorrow?

Daan Struyven, Goldman Sachs’ global economist, looks inflationary drivers in a global context, and concludes that while inflation is set to subside across most G10 economies in 2H22, it will likely remain structurally higher—to the tune of an average 0.5pp above the pre-pandemic level—in the years ahead: The inflation debate this year has centered on


Global wealth inequality widens during COVID

As the markets start to slow down for the year, its easy to get the ruler and calculator out and work out where wealth has increased across the world, in a year marked by a second wave of COVID and inflationary fears. One thing that hasn’t changed is inequality. The richer get richer – helped


Has Omicron mutated into a flu?

Data and studies are emerging suggesting that the omicron coronavirus strain is far less dangerous than prior strains and results in far lower levels of hospitalisation. From The Australian: New data from Scotland and South Africa suggest people infected with the Omicron variant of coronavirus are at markedly lower risk of hospitalization than those who


Inflation fears to evaporate in 2022

Soc Gen’s Albert Edwards with the note: As we end the year, markets are becoming increasingly nervous that US equities – and the US tech sector specifically – are having the rug pulled out from under them. Market internals are also giving out loud warnings. Just as in 2001, could the unravelling of the recent


Shock horror: ‘skilled’ visas used to lower wages

Last year, the Economic Policy Institute released research showing that the United States’ temporary skilled visa scheme (H1B) was being used by employers to undercut local workers’ wages. The analysis was based upon the Department of Labor’s Occupational Employment Statistics (OES) survey, which constructed a distribution of wages for each occupation in a specific geographic


Omicron yet to fill up hospitals

Mark The Graph has posted several charts on Twitter showing how the Omicron strain of COVID is yet to fill up the world’s hospitals. Below are key international charts: Below is the all important chart for NSW: And below is a chart for South Africa, which is where Omicron originated from: While it is still


Israel rolls out fourth COVID jab

Israel has become the first nation to roll out a fourth COVID jab: Israeli Prime Minister Naftali Bennett says people over age 60 and medical teams will be eligible for a fourth COVID-19 vaccination, following the recommendation of an expert panel, news agency AFP reports. “I gave an order to prepare immediately for a fourth


OECD study: Work from home is here to stay

A new global study of workers in 25 countries by the OECD suggests that work from home (WFH) arrangements will be a permanent fixture post-pandemic: Both employees and managers found working from home during the pandemic was positive for performance and well-being, a report by the OECD found. The proportion of staff teleworking at least


Why car prices will continue to rise

Goldman Sachs with the note: With used car auction prices on the rise again, we revisit the outlook for motor vehicle inflation across three dimensions: 1) the relative prices of new versus used cars, 2) Omicron-driven factory closures in East Asia, and 3) US port congestion. Despite recent appreciation, prices of new cars remain unsustainably


Is the Baltic Index drop a warning sign for markets?

The canary in the coal mine that indicates a probable slowdown going into 2022 maybe something brewing in the staid world of shipping, with the Baltic Dry Index having a shocking week that has extended into a poor start yesterday, with nine straight losses in a row, now taking it to the April lows. Nearly


Global economy slowing as central banks tighten

Mizuho Securities with the note: The OECD published its composite leading indicators (CLIs) for November on 9 December. They point to slower growth in the world’s advanced and major emerging-market economies over the coming 6–9 months. The OECD sees a “possible peak” in the US, the euro area, and Japan, suggesting that growth may slow.


Omicron evades most vaccines

Preliminary research seems to suggest that most COVID vaccines offer almost no defense against infection from the highly contagious Omicron variant. In particular, vaccines from AstraZeneca, Johnson & Johnson and those manufactured in China and Russia do little to nothing to stop the spread of Omicron, early research shows. And because most countries have built


Europe begins lockdowns as Omicron wave swells

The Netherlands over the weekend announced that it will commence a four-week hard lockdown amid a recent surge in COVID cases: From the BBC: Non-essential shops, bars, gyms hairdressers and other public venues will be closed until at least mid-January. Two guests per household will be allowed – four over the holidays. Prime Minister Mark


Why is US labour supply so tight?

Goldman Sachs has released a new paper entitled “Why is US Labor Supply so Low?”, which is leading to wage pressures: Goldman shows that US labour force participation rate has declined more since 2019Q4 than in most other developed economies: Goldman ascribes four main drivers of the US’ low participation rate: About one-half of the


Europe’s Omicron puzzle

HSBC Global Research with the note: While most of Europe is still fighting against the Delta wave… …an even larger threat already looms at the doorstep as the Omicron variant has already started to spread… …which increases the uncertainty around the near-term economic and policy outlook Out of the frying pan and into the fire?