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There is one big difference between the global and local slowdowns right now. It is that while much of the world is entering an industrial recession with services economies holding up, Australia is the complete opposite. The US is seeing an industrial slowdown with services booming: Same in Europe exemplified by Germany: Same in China
By Leith van Onselen The Australian’s Judith Sloan has done a terrific job tearing apart the theme of the 2019 World Economic Forum (WEF) in Davos: “Globalisation 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution”. The annual WEF forum in Davos is attended by the ‘who’s who’ of global elites,
by Chris Becker As the world’s elite – besides Donald Trump who is holed up in his McMansion – descend upon Davos for the World Economic Forum, the IMF is out with an update to its growth forecasts. The timing could have been a bit better given the release of the Chinese 4Q GDP print
Via Damien Boey of Credit Suisse: Momentum investing is based on the idea that tomorrow’s winners and losers will resemble yesterday’s winners and losers on average, whether on 12-month total return, or 3-month earnings revision bases. We find that macro factors can predict when momentum factors are likely to work well, although there are also
By Leith van Onselen The Teranet-National Bank House Price Index for December has been released, which reported a third consecutive monthly decline in home values: The Teranet–National Bank National Composite House Price IndexTM for December was down 0.3% from the previous month. It was the third consecutive monthly retreat. The component indexes were down for seven
By Leith van Onselen After spending a decade worrying about the rise of Japan, economists (and population boosters) in Australia have frequently labelled Japan an ‘economic basket case’ due to its ageing (and falling) population and its slow growth in headline GDP. I have frequently challenged this argument, citing Japan’s enviously low unemployment rate, which
By Leith van Onselen After vigorously opposing the Trans-Pacific Partnership (TPP) in the lead-up to the 2016 Presidential Election, the Trump Administration appears to be having second thoughts. From The AFR: Donald Trump has backed a fresh drive by the United States to re-engage with Australia and Asia on trade deals such as the Trans-Pacific
Via Damien Boey as Credit Suisse: In recent articles, we have talked about the tail risks from central bank balance sheet reduction globally. Overnight, we have seen central bankers wax and wane in their positions: After suggesting recently that balance sheet reduction need not be on “auto-pilot”, Fed Chair Powell has come back saying that
Via UBS today, We are now tracking Q4 global growth at only 2.7% QoQ annualized. That’s the 6th lowest percentile post-crisis, and about 150bp below the read for H1-18. EM and DM are roughly equally bad: EM growth is tracking at 3.95% (vs a post-crisisaverage of 5.4% and an H1-18 average of 5.7%) and DM
by Chris Becker Following on from the dreadful German industrial production print overnight, there’s more signs that the global growth machine is sputtering. The World Bank is out with it’s latest growth forecasts, and have slashed away, with advanced economies to drop to 2%: Global growth is expected to slow to 2.9 percent in 2019.
by Chris Becker At the end of March this year, or in less than 90 days, the UK is set to leave the European Union. The EU and UK’s Prime Minister Theresa May have struck a deal, but it needs to be voted on in Parliament before such a deal is ratified. The exit from
From Moodys: The world is now incapable of shouldering a 10-year Treasury yield above 3%. A remedial decline by the U.S.’ benchmark interest rates will be critical to rejuvenating global business activity and stabilizing financial markets. Otherwise, the corporate earnings outlook might deteriorate by enough to sink the market value of U.S. common stock by
by Chris Becker Just in time for the New Year crash, here comes some stellar news from the IMF (my emphasis added): Global debt has reached an all-time high of $184 trillion in nominal terms, the equivalent of 225 percent of GDP in 2017. On average, the world’s debt now exceeds $86,000 in per capita terms,
by Chris Becker Got to hand it to the GOP, they know how to spoil a party. After passing the biggest tax cuts in history, leading to a huge surge in the US stock market throughout 2018, 2019 looks to be the year of reckoning for the increasingly irrelevant party. The US federal government is
by Chris Becker Looks like we’re reliving the GFC all over again with interconnectedness so high that global currency and stock markets are going to crash because some single Chinese youths are not buying as many iPhones as they should. Apple announced a near 10% reduction in its forward guidance, releasing this report: While we
by Chris Becker Some epic volatility in the FX market at the moment with Yen moving both Aussie and USD around: This is very troubling indeed, with the lack of liquidity as key levels are taken out really showing how volatile and dangerous the FX world really is – and why most traders don’t hold
By Leith van Onselen Australia has again taken the silver medal for having the world’s second most indebted households according to the latest data from the Bank for International Settlements (BIS). The next table shows the ratios of household debt to GDP as at the June quarter of 2018. As you can see, Switzerland (129%)
Via Capital Economics: The conventional view of the long-term prospects for the global economy can be summarised as: EMs good, DMs bad. Like most things, however, we suspect that the conventional view is likely to be wrong. Last week we published our first Long Term Global Economic Outlook, which sets out forecasts for the major
By Leith van Onselen The UK has cracked down on their equivalent of Special Investor Visas, halting the scheme because of fears it is being used to launder money. From BBC News: Ministers are halting a “gold-plated” visa scheme offering foreign investors a fast-track to settling in the UK, as part of a crackdown on financial
Via FTAlphaville: With roughly six months to go until the US expansion becomes the longest on record, there has been growing concern that the global economy more broadly is running on late-cycle fumes. Lofty valuations, soaring profit margins, a flattening yield curve and a Federal Reserve tightening in the face of (admittedly muted) inflationary pressures
Via Capital Economics: The sharp fall in oil prices over the past month or so has led to several questions about the implications for the global economy. We’ve written lots on this subject, including how central banks might respond and why the major oil producers are now better positioned to weather a fall in prices than they were a
Australia Housing Finance Australian house prices v the rest Australian house prices to income v the rest Sydney & Melbourne Auction Clearances Employing Sectors Consumer Confidence Housing Sales and Stamp
By Leith van Onselen At the beginning of the year, the Turnbull Government revealed that Australia would head into a new secretive 16-member mega trade pact called the Regional Comprehensive Economic Partnership (RCEP), which was expected to be concluded by year’s end. The RCEP is backed by China and also includes the ASEAN countries along
Some nice charts from Damien Bey as Credit Suisse give us context: Credit Suisse’s proprietary measure of risk appetite very briefly entered panic in mid-August 2018. It has since staged a modest recovery to less negative levels. 2. Past cycles show that after risk appetite enters panic, small caps tend to outperform in the following
Via Capital Economics today: Our view that the world economy will undergo a reasonably sharp slowdown over the next couple of years stands in contrast to the relatively rosy consensus. (See Chart 1.) And it has led several clients to ask the obvious question: what causes the downturn in our forecast that others may be
DXY is breaking out. EUR is weak and CNY the meat in the sandwich: The rising DXY sat on any AUD rebound but it rose against other DMs: Was mixed against EMs: Gold flamed out: Oil firmed: Base metals sagged: Big miners snapped back: As did EM stocks: And junk: Treasuries were sold a little:
DXY took off last night. EUR was down and looks precarious. CNY firmed: AUD was hit against the USD but held up against the tumbling EUR: EMs were mixed: Gold held on aided by worries over EUR: Oil fell: Base metals were OK: Big miners tumbled anyway: EM stocks were smoked: Junk was dragged in
Via Axios which has good sources on this stuff: President Trump has no intention of easing his tariffs on China, according to three sources with knowledge of his private conversations. Instead, these sources say he wants the Chinese leaders to feel more pain from his tariffs — which he believes need more time to fully
By Leith van Onselen Credit Suisse has released its 2017 Global Wealth Report, which reveals that Australian households are the wealthiest in the world when measured by median wealth: Household wealth in Australia grew at a fast pace between 2000 and 2012 in US dollar terms, except for a short interruption in 2008. The average
