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26.08.2016 US NEW RESIDENTIAL CONSTRUCTION INCREASES AS EXISTING SUPPLY REMAINS LOW

New home sales jumped by 12.4% to an annualized 654k in July, the highest pace since October 2007, as sales are being buoyed by robust demand, low mortgage rates, solid job and income gains, and the short supply of for-sale existing homes. Despite the recent improvement, new home sales are still well off their pre-recession pace as there is still plenty of room for improvement in the new residential construction sector.

Mickey Levy Macro Flash Download:  US NEW RESIDENTIAL CONSTRUCTION INCREASES AS EXISTING SUPPLY REMAINS LOW
26.08.2016 US DURABLE GOODS REPORT DIM ON CURRENT ACTIVITY BUT BRIGHTER ON THE FUTURE

Core durable goods shipments declined by 0.4% in July raising doubt about a rebound in business investment this quarter. However, the robust 1.6% m/m increase in core durable goods orders suggest that a turnaround in factory activity may be near.

Mickey Levy Macro Flash Download:  US DURABLE GOODS REPORT DIM ON CURRENT ACTIVITY BUT BRIGHTER ON THE FUTURE
26.08.2016 UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT

UK economic growth accelerated to 0.6% qoq in Q2 from 0.4% in Q1. As expected, the more detailed data today confirmed the first estimate published 27 July. Remarkably, the cyclical performance of the UK economy improved in the second quarter despite widespread signs in the soft data that economic growth was slowing, weighed down by the uncertainty related to the June 23 Brexit vote. Early signs suggest that this disparity between the hard and soft data has continued after the vote. July data for the labour market and retail spending improved despite the falls in reported consumer and business confidence.

Kallum Pickering Macro Flash Download:  UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT
26.08.2016 UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT

UK economic growth accelerated to 0.6% qoq in Q2 from 0.4% in Q1. As expected, the more detailed data today confirmed the first estimate published 27 July. Remarkably, the cyclical performance of the UK economy improved in the second quarter despite widespread signs in the soft data that economic growth was slowing, weighed down by the uncertainty related to the June 23 Brexit vote. Early signs suggest that this disparity between the hard and soft data has continued after the vote. July data for the labour market and retail spending improved despite the falls in reported consumer and business confidence.

Kallum Pickering Macro Flash Download:  UK: STRONG Q2 GDP - ROBUST DOMESTIC DEMAND PLUS UPSIDE SURPRISE ON INVESTMENT
26.08.2016 ECB POLICY: LESS EFFECTIVE BUT STILL WORKING

Monetary policy is still working in the Eurozone. While less effective than in previous cycles, the ECB’s stimulus is yielding some results. In July, credit growth in the Eurozone strengthened slightly further. The monetary and credit dynamics are compatible with trend growth in GDP, which we put at roughly 1.6%. Although the impact of Brexit, political uncertainty and possibly renewed concerns about China will likely push actual Eurozone growth slightly below its trend rate in Q3 and Q4, we expect the region to return to trend growth in early 2017.

Holger Schmieding Macro Flash Download:  ECB POLICY: LESS EFFECTIVE BUT STILL WORKING
25.08.2016 GERMAN IFO SIGNALS DENT TO GROWTH IN Q3

After a strong first half of the year, the German economy will probably lose some momentum in this and the next quarter. The business climate fell to 106.2 in August after 108.3 in July and well below consensus of 108.5.

Florian Hense Macro Flash Download:  GERMAN IFO SIGNALS DENT TO GROWTH IN Q3
24.08.2016 BREXIT? WHAT BREXIT? TAKING STOCK TWO MONTHS AFTER THE VOTE

Two months ago, the world woke up to learn that the UK had voted to leave the European Union. For two major reasons, the initial shock has subsided fast: 
•        Instead of taking charge, the leading Brexiteers lost the ensuing power struggle within the Conservative party as the mildly pro-EU Theresa May prevailed within just three weeks.
•        May’s calm and slow approach to Brexit issues has fostered the impression that she will seek realistic co-operation rather than ideological confrontation with the EU27.
 
While nothing has been settled and the uncertainty about the UK’s future access to its major market seems to be weighing on investment and parts of the real estate market in the UK, the country did not fall into an escalating economic and political crisis. Financial markets re-priced UK assets in an orderly fashion through the exchange rate. Although a weaker Sterling does little to ease concerns about the future of Greater London as the services centre for Europe, it helped to lure more tourists to the UK.‎ In the EU27, the repercussions of the Brexit vote have been rather mild.

Holger Schmieding Macro Flash Download:  BREXIT? WHAT BREXIT? TAKING STOCK TWO MONTHS AFTER THE VOTE
24.08.2016 UK HOUSING MARKET RESILIENT IN JUL

Loans for house purchase resilient in July. According to the British Bankers’ Association, the number of loans for house purchase dropped only slightly to 37,662 in July, from 39,763 in June. While the number of loans for house purchase has fallen in recent months after peaking at 46,386 in January, they remain far above the lows of the financial crisis (17,087 in Nov 2008) and the euro crisis (27,752 in Dec 2010). The fall in loans for house purchase is in part due to the heightened uncertainty and lower confidence since the Brexit-vote. The higher rate of stamp duty on second homes since April is also a significant factor. Separate data for July from HM Revenue and Customs (HMRC) showed that residential property transactions remained stable after the vote. There were 94,550 transactions in July according to HMRC compared to 95,430 in June -  up from the April low of 80,090 when stamp duty changes came into effect.

Kallum Pickering Macro Flash Download:  UK HOUSING MARKET RESILIENT IN JUL
23.08.2016 FED'S JACKSON HOLE SYMPOSIUM: WHAT IT'S ALL ABOUT AND WHAT TO LOOK FOR

The Fed’s Jackson Hole Symposium will focus on very important large macro topics that are critically important to financial market participants, including the historically low interest rates and the unprecedented monetary policies of global central banks.  However, besides acknowledging the challenges of the current environment, Yellen’s presentation and any remarks by other Fed members at the symposium are not expected to yield any new insights about either the near-term path of US Fed monetary policy or any new thinking about what the Fed can or should do to improve economic performance.

Mickey Levy Macro Flash Download:  FED'S JACKSON HOLE SYMPOSIUM: WHAT IT'S ALL ABOUT AND WHAT TO LOOK FOR
22.08.2016 MONDAY MACRO UPDATE: EU POLITICS, ECONOMIC OUTLOOK, JACKSON HOLE

Merkel, Hollande and Renzi meet today to discuss post-Brexit EU reforms. The informal get-together starts a series of intra-EU discussions ahead of the 16 September summit where EU27 leaders want to outline some reform ideas to be elaborated in more detail in the six months thereafter.

Holger Schmieding Macro Views Download:  MONDAY MACRO UPDATE: EU POLITICS, ECONOMIC OUTLOOK, JACKSON HOLE
18.08.2016 WHAT BREXIT? UK RETAIL SALES ACCELERATE STRONGLY FOLLOWING BREXIT VOTE

UK retail sales growth accelerated strongly after the Brexit vote despite soft data for July showing a sharp negative shock to consumer confidence. Retail sales volumes ex. auto fuel beat expectations, growing by 1.5% mom (exp. 0.3%) and 5.4% yoy (exp. 3.9%) – the fastest annual growth rate since September 2015. While monthly data are volatile, the 3M/3M change paints a clear picture of improving household demand in the period before and after the June 23 EU referendum. In the three months to July, retail sales ex. auto fuel increased by 1.9%, almost three times the average of 0.7% since 2000 and the fastest rate since December 2014.

Kallum Pickering Macro Flash Download:  WHAT BREXIT? UK RETAIL SALES ACCELERATE STRONGLY FOLLOWING BREXIT VOTE
17.08.2016 UK: LABOUR MARKET STRONG IN JUNE BEFORE THE BREXIT VOTE WHILE JOBLESS CLAIMS FELL IN JULY

Today’s labour market data is mainly for the month of June, before the Brexit vote. The data shows no evidence of Brexit-jitters and instead reflects the strong economic conditions that preceded the referendum.  Unemployment remained stable at 4.9% in the three months to June, in line with consensus expectations, while 3m/3m employment increased by 172k (exp. 150K). The UK employment rate for 16-64 year olds was 74.5%, the highest on record. Weekly earnings growth including and excluding bonuses remained sluggish but improved by 0.1ppt compared to May, increasing by 2.4% and 2.3% respectively.

Kallum Pickering Macro Flash Download:  UK: LABOUR MARKET STRONG IN JUNE BEFORE THE BREXIT VOTE WHILE JOBLESS CLAIMS FELL IN JULY
16.08.2016 GERMAN ZEW REBOUNDS FROM INITIAL SHOCK

German ZEW surveys rebounded in July to pre-Brexit vote levels. While the expectations indicator (+6 months) recovered to 0.5 from -6.8 in July, it was below expectations of 2.0. Current assessment, the more reliable indicator of underlying conditions, rose to 57.6 (vs. 49.8 in July and 50.2 expected).

Florian Hense Macro Flash Download:  GERMAN ZEW REBOUNDS FROM INITIAL SHOCK
16.08.2016 UK INFLATION INCREASES IN JULY - NO SIGNS OF BREXIT EFFECT JUST YET

Headline inflation in the UK increased to 0.6% yoy in July from 0.5% in June, in line with our expectations. Core inflation, a measure of underlying inflation that subtracts volatile components such as food and energy, slowed to 1.3% yoy in July compared to 1.4% yoy the previous month. The impact of the Brexit vote will take time to feed through into inflation. The changes in the components of July inflation reflected the improving underlying economic conditions pre-vote. Prices continued to fall for food and non-alcoholic beverages, due to strong competition in the supermarket sector. Most of the upward pressure came from components linked to growth in discretionary spending such as (1) restaurants and hotels and (2) recreation and culture.

Kallum Pickering Macro Flash Download:  UK INFLATION INCREASES IN JULY - NO SIGNS OF BREXIT EFFECT JUST YET
12.08.2016 EUROZONE Q2 GDP SLOWS, GERMANY SURPRISES, ITALY DISAPPOINTS

Boosted by strong results from Germany, Spain and the Netherlands, the Eurozone economy continued to expand at a satisfactory pace in Q2. Although growth slowed from an unusually strong 0.6% qoq gain in Q1 to 0.3% qoq in Q2 as the unusually mild winter gave way to ‎a more normal spring, the underlying trend remains encouraging.

Florian Hense Macro Flash Download:  EUROZONE Q2 GDP SLOWS, GERMANY SURPRISES, ITALY DISAPPOINTS
12.08.2016 HAS THE BOE STARTED A CURRENCY WAR? NOT AT ALL

A weaker currency during a downturn can limit the downside for a flagging economy. Higher import costs and more competitively priced exports often improve the trade balance as imports decline while exports rise, resulting in a plus for GDP. After last week’s rate cuts and new asset purchases (QE), the BoE has been accused of entering a ‘currency war’. This is a little odd. The notion ignores historical evidence for the UK and elsewhere.

Kallum Pickering Macro Flash Download:  HAS THE BOE STARTED A CURRENCY WAR? NOT AT ALL
12.08.2016 GERMAN UPSWING TAKES ONLY A SMALL BREATHER

After a bounce in early 2016, the German upswing took less of a breather than expected  in Q2. Despite a drag from a weather-related drop in construction, gains in private and public consumption and a further rise in exports raised German GDP by 0.4% qoq, well ahead of the 0.2% qoq consensus. The downside risk to our own 0.3% qoq call did not materialise.

Holger Schmieding Macro Flash Download:  GERMAN UPSWING TAKES ONLY A SMALL BREATHER
11.08.2016 AFTER THE SUMMER BREAK: NO NEWS IS GOOD NEWS

Back in the office after a few weeks spent near the Arctic circle, a first glance suggests that not much has changed. Except for unexpectedly weak US GDP in Q2, most data and developments seem to be roughly in line with our expectations. By and large, markets are behaving accordingly. Valuations still reflect a fundamental caution signalled for instance by the huge yield gap between “safe haven” bonds and equity dividends. In such an environment, markets are inclined to stabilise or move up in the absence of major news, that is if no major risk materialises. That seems to have been the case in the last few weeks.

Holger Schmieding Macro Flash Download:  AFTER THE SUMMER BREAK: NO NEWS IS GOOD NEWS
05.08.2016 BOE GETS CREATIVE IN RESPONSE TO BREXIT SHOCK

Here are the key points from the August Inflation Report.
● A 25bp rate cut, £60bn increase in quantitative easing (QE), £10bn corporate bond purchases and new Term Funding Scheme.
● More easing likely: A “majority of members expected to support a further cut in the bank rate…during the course of the year”.
● The MPC unanamously voted for a rate cut, voted 8-1 on corporate bond purchases and voted 6-3 on expanding QE.
● There is no recession in the Bank of England’s (BoE) central forecast, but the Monetary Policy Committee (MPC) sees “little growth in GDP during the second half of year”.

Macro Flash Download:  BOE GETS CREATIVE IN RESPONSE TO BREXIT SHOCK
01.08.2016 BoE preview: going for a goldilocks stimulus

Soft data for the month of July indicate that the UK economy has slowed abruptly following the Brexit vote, with a risk of recession in the second half of 2016. In light of the comments made in the past month by the BoE governor Mark Carney ‘easing over the summer’, plus explicit guidance in the July meeting minutes that ‘most members of the Committee expect monetary policy to be loosened in August’, it is not a question of if the BoE will ease policy later this week, but by how much.

Kallum Pickering Macro Flash Download:  BoE preview: going for a goldilocks stimulus
29.07.2016 EUROZONE Q2 GDP GROWTH SLOWED BEFORE BREXIT

The Eurozone economy slowed in the second quarter, from 0.6% to 0.3%. The slowdown in the second quarter was, however, mainly for arithmetic reasons. The first quarter was unusually strong due to one-time effects.

Florian Hense Macro News Download:  EUROZONE Q2 GDP GROWTH SLOWED BEFORE BREXIT
29.07.2016 BREXIT UPDATE: REFERENDUM IMPACT ON UK HOUSEHOLDS IN 4 CHARTS

Households are the main engine of growth for the UK economy. 2/3 of GDP is private consumption. Brexit uncertainty started to weigh on consumer confidence in the run up to the referendum. Data for household conditions has deteriorated further in July. While gains in net trade from the weaker sterling may offset drops in business investment, the evolution of private consumption over the coming quarters will determine by how much GDP growth slows, or indeed, if the UK enters a recession.Today, GfK published household survey data for the month of July. Key points are as follows: 

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: REFERENDUM IMPACT ON UK HOUSEHOLDS IN 4 CHARTS
28.07.2016 EUROZONE UPDATE: UPSIDE RISK FOR Q2 EUROZONE GROWTH

For tomorrow’s preliminary flash estimate of GDP growth in Q2, we expect to see a soft reading of 0.2% qoq. This is mainly an arithmetic effect following the stellar first quarter (0.6%).

Florian Hense Macro News Download:  EUROZONE UPDATE: UPSIDE RISK FOR Q2 EUROZONE GROWTH
27.07.2016 UK GDP - RESILIENT TO BREXIT RISK IN Q2

The UK economy accelerated in the second quarter of the year despite the notable weakness in soft data in the months before the EU referendum. GDP expanded by 0.6% qoq compared to 0.4% in Q1 and versus expectations of 0.5%. The acceleration in the second quarter is in sharp contrast to Q2 PMI data that suggested growth of 0.3-0.4% qoq, indicating that soft data somewhat exaggerated the impact of Brexit uncertainty.  If this trend continues, it supports our call that the UK will stagnate and avoid recession in the near-term in reference to the sharp weakness soft data since the Brexit vote on June 23.

 

Kallum Pickering Macro Flash Download:  UK GDP - RESILIENT TO BREXIT RISK IN Q2
27.07.2016 Economic and political consequences of attacks in Europe

Our core theme for Europe in 2016 is that we need to watch politics first, then economics. Brexit has been a realisation of such political risk.  As European nations debate how to move forward, including how to negotiate with the UK on the details of its exit from the EU, the spate of attacks may contribute to the changed political environment.  While the attacks could strengthen the ties between European nations, increasing cooperation on security and foreign policy issues to present a united front to the challenges, the opposite may occur.  Right-wing populists could heighten their arguments to limit migration and encourage retreat from European co-operation.  At a minimum, there will be more pressure on European leaders who are striving to maintain cohesion in the face of rising concerns among citizens. The attacks also carry economic risks.

Kallum Pickering Macro Flash Download:  Economic and political consequences of attacks in Europe
25.07.2016 BREXIT UPDATE: UK ECONOMY HIT HARD, EUROZONE RESILIENT SO FAR

UK – stagnation ahead, significant downside risks: Data released today from the Confederation of British Industry (CBI) showed that industrial orders remained resilient following the Brexit vote while the level of optimism in the UK industrial sector fell to its lowest level since 2009. Eurozone – withstanding the Brexit shock – some risks to the outlook: In contrast to data for the UK in the month of July which has sharply deteriorated, Eurozone data remains modestly positive on-balance.

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: UK ECONOMY HIT HARD, EUROZONE RESILIENT SO FAR
25.07.2016 GERMAN IFO AFTER BREXIT: ENCOURAGINGLY RESILIENT

Ifo survey data for July beat expectations across the board – showing no real signs of an impact from the Brexit vote. This is more evidence, along with the PMI data published last Friday, that the EU’s largest economy is weathering the Brexit storm. 

Florian Hense Macro Flash Download:  GERMAN IFO AFTER BREXIT: ENCOURAGINGLY RESILIENT
22.07.2016 UK JULY PMIS - KNEE-JERK REACTION TO BREXIT VOTE

The Brexit vote and the short but messy period in British politics immediately after June 23 present serious downside risks to the near-term outlook. The limited soft data for the period since the UK voted to leave the EU has been mixed so far. Confidence indicators and Bank of England field work point to resilient demand, and stagnation rather than recession in the coming quarters. But the PMI data for July released today point to a sharp drop in economic activity. The risk of a recession in H2 2016 is significant. We expect the Bank of England to respond to this threat with a fairly aggressive stimulus package at the upcoming Inflation Report on the 4 August. We look for a 25bps rate cut with a 60% chance of QE – circa £100bn.

Kallum Pickering Macro Flash Download:  UK JULY PMIS - KNEE-JERK REACTION TO BREXIT VOTE
21.07.2016 ECB WILL BE DATA-DEPENDENT IN CONSIDERING POTENTIAL RESPONSE TO BREXIT

Despite the potential risks the Brexit vote presents to the near-term growth outlook for Eurozone economy, the ECB was decidedly neutral in their first opportunity to address market concerns since June 23. While the ECB reiterated previous guidance of being “ready, willing and able” to expand the current stimulus, if required, they did not provide a significant advance on their pre-referendum guidance.

Florian Hense Macro Flash Download:  ECB WILL BE DATA-DEPENDENT IN CONSIDERING POTENTIAL RESPONSE TO BREXIT
21.07.2016 ECB PREVIEW: KEEPING ITS OPTIONS OPEN

The ECB’s Governing Council will come together today for its first monetary policy meeting since the Brexit vote on 23 June. While Eurozone growth looks set to slow in the coming quarters, we expect the ECB to keep its policy setting unchanged, for now (main policy rate at 0.0%, deposit rate at -0.4% and total monthly asset purchases at €80 bn).

Florian Hense Macro Flash Download:  ECB PREVIEW: KEEPING ITS OPTIONS OPEN
20.07.2016 Brexit update: can the UK avoid a recession?

Following the UK’s vote to leave the EU on June 23 uncertainty about the long-term outlook has risen. But so far, the limited information on the economy for the period since the referendum is consistent with a stagnation in the near-term rather than an outright recession.

Kallum Pickering Macro Flash Download:  Brexit update: can the UK avoid a recession?
19.07.2016 GERMAN ZEW: BREXIT TAKES TOLL ON INVESTOR CONFIDENCE

German ZEW surveys drop to euro crisis levels on Brexit shock. Expectations dropped to -6.8 (vs. +9.0 expected and +19.2 in June before the Brexit vote).

Florian Hense Macro News Download:  GERMAN ZEW: BREXIT TAKES TOLL ON INVESTOR CONFIDENCE
14.07.2016 BOE HOLDS FOR NOW – SIGNALS EASING IN AUGUST

The jump in sterling and gilt yields immediately after the BoE published its decision to keep policy unchanged in July gives the impression that the MPC minutes were hawkish. This is not the case.

Kallum Pickering Macro Flash Download:  BOE HOLDS FOR NOW – SIGNALS EASING IN AUGUST
14.07.2016 Brexit update - politics, monetary policy and housing

Brexit means Brexit (eventually), as May sets up a Brexit cabinet. 60% chance BoE cut rates today as the MPC holds first official meeting since Brexit vote.Housing activity slowed sharply in June according to RICS.

Kallum Pickering Download:  Brexit update - politics, monetary policy and housing
13.07.2016 SPAIN: END OF POLITICAL STALEMATE?

After seven months of stalemate, Spain may be one step closer to the end of its political paralysis. The liberal Ciudadanos party will likely decide today to allow Mariano Rajoy to form a minority government by abstaining in the decisive vote in parliament.

Florian Hense Macro Flash Download:  SPAIN: END OF POLITICAL STALEMATE?
12.07.2016 UK: ECONOMIC IMPLICATIONS OF PRIME MINISTER MAY

Theresa May will replace David Cameron as UK Prime Minister on Wednesday. In this flash we discuss the key economic implications relating to her appointment.

Kallum Pickering Macro Flash Download:  UK: ECONOMIC IMPLICATIONS OF PRIME MINISTER MAY
11.07.2016 JULY MPC MEETING PREVIEW: READY TO ACT, CHANCE OF RATE CUT

The Bank of England’s (BoE) rate setting committee will meet on Thursday for the first Monetary Policy Committee (MPC) meeting since the UK voted to leave the EU on June 23.  The minutes released at midday will detail the MPC’s assessment of the economy since the Brexit vote as well as any policy changes. We see a 60% chance that the nine member MPC votes to cut the bank rate, if so, probably by 25bps. However, there is a chance that the MPC holds for now, and instead opts to send a dovish signal that the bank will ease monetary policy three weeks later at the August Inflation Report when it is due to publish its revised economic forecasts.

Kallum Pickering Macro Flash Download:  JULY MPC MEETING PREVIEW: READY TO ACT, CHANCE OF RATE CUT
08.07.2016 BREXIT FALLOUT: UK GFK CONFIDENCE FALLS, GERMAN SUPPORT FOR EU RISES

Following the UK vote to leave the EU, consumer confidence in the UK has suffered its sharpest fall in 21 years.

Holger Schmieding Macro Views Download:  BREXIT FALLOUT: UK GFK CONFIDENCE FALLS, GERMAN SUPPORT FOR EU RISES
07.07.2016 GERMAN PRODUCTION: CORRECTION AFTER STRONG Q1

Industrial production in Germany unexpectedly dropped in May with political uncertainty in Europe ahead of the British vote on EU membership likely weighing on activity.

Florian Hense Macro Flash Download:  GERMAN PRODUCTION: CORRECTION AFTER STRONG Q1
05.07.2016 UK: CONFIDENCE CRISIS BUT NO EVIDENCE OF RECESSION YET

The uncertain business environment and economic outlook ahead of the Brexit vote weighed on GDP growth in the second quarter. The full set of PMIs for Q2 is in line with our call that the economy expanded by 0.3% qoq.

Kallum Pickering Macro Flash Download:  UK: CONFIDENCE CRISIS BUT NO EVIDENCE OF RECESSION YET
05.07.2016 UPDATE ON BREXIT CONTAGION RISKS

Will the British vote to leave the EU embolden anti-European populists elsewhere in Europe – or will the political and economic uncertainty into which the vote has plunged the UK serve as a salutary lesson for voters elsewhere? For the EU-27, this could turn into the key issue to watch in the coming months.

Holger Schmieding Macro Views Download:  UPDATE ON BREXIT CONTAGION RISKS
05.07.2016 EUROZONE PMI HOLDS STEADY BEFORE BREXIT

The final reading of June’s PMI composite of 53.1 was unchanged from May and stable at a level in line with trend growth. This is the 19th consecutive expansion of the index (a level of 50 indicates neutral).

Florian Hense Macro Flash Download:  EUROZONE PMI HOLDS STEADY BEFORE BREXIT
04.07.2016 UK AND EU: UPDATE ON BREXIT FALLOUT

KEY ISSUES FOR THE UK: Frontrunners for Conservative party leader vary on timing of Brexit talks with EU. UK Government debt still not a serious risk to the UK economy following change to fiscal plans. KEY ISSUES FOR THE EU-27: The future of the EU. French politics. Bellwether Austria

Holger Schmieding Macro Views Download:  UK AND EU: UPDATE ON BREXIT FALLOUT
01.07.2016 NOTES ON THE SCOTTISH ISSUE

Eight days ago, 62% of Scots voted to stay in the EU. Scotland's regional government now wants to secure its nation's place in the EU.‎

Holger Schmieding Macro Views Download:  NOTES ON THE SCOTTISH ISSUE
29.06.2016 BREXIT IMPACT ON EU: CONTAGION OR SALUTARY LESSON?

From an EU-27 perspective, the big British question is largely settled. Sadly, the UK has voted to leave. Unless the UK relents, which I consider as unlikely but not impossible, the UK will be out. For the sake of its own cohesion, the EU-27 cannot offer better terms than before to keep the UK in.

Holger Schmieding Macro Flash Download:  BREXIT IMPACT ON EU: CONTAGION OR SALUTARY LESSON?
29.06.2016 EURO AREA CONFIDENCE SOFTENS ON EVE OF BREXIT VOTE

Euro area economic confidence weakened slightly in June in anticipation of a UK referendum that unex-pectedly saw Britons choosing to leave the European Union. The broad-based economic sentiment somewhat confirms the risks the narrower PMIs signalled already last weak.

Florian Hense Macro Flash Download:  EURO AREA CONFIDENCE SOFTENS ON EVE OF BREXIT VOTE
28.06.2016 BREXBACK? PROBABLY NOT

Political turmoil in the UK, some soul-searching in the EU-27, a major but largely orderly re-pricing of fi-nancial assets, a plunge in Sterling, rating downgrades for the UK: so far, the impact of the UK vote to leave the EU is playing out like many observers including us had predicted in our “what if” risk scenarios ahead of the vote.

Holger Schmieding Macro Flash Download:  BREXBACK? PROBABLY NOT
28.06.2016 AFTER THE BREXIT SHOCK

British regret? Over 3 million people sign an online petition to the UK parliament to discuss a second referendum. UK Labour Party leader Jeremy Corbyn faces a leadership challenge after his particularly lacklustre pro-EU campaign.

Holger Schmieding Macro Flash Download:  AFTER THE BREXIT SHOCK
28.06.2016 SPAIN: POPULISTS LOSE VOTES BUT STALEMATE CONTINUES

Will Britain's shock vote to leave the UK embolden populists elsewhere in Europe? That has become the key question for Europe. The result of Spain's repeat election on Sunday shows no trace of such contagion effects.

Holger Schmieding Macro Flash Download:  SPAIN: POPULISTS LOSE VOTES BUT STALEMATE CONTINUES
27.06.2016 BREXIT UPDATE: 5 QUESTIONS FOR THE COMING MONTHS

UK politics has fallen into crisis following the vote for Brexit last Thursday. The resulting uncertainty and market tensions could further dampen activity in the domestic economy in the near-term. Currently, there are more questions than answers. To discuss likely outcomes amid unprecedented uncertainty we focus on five key areas:

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: 5 QUESTIONS FOR THE COMING MONTHS
22.06.2016 After the Brexit vote: assessing the domino risks

Domino risks: In this report, we look at the tail risk that key Eurozone members may decide to leave the euro or that Sweden or Denmark may vote themselves out of the EU.

Holger Schmieding, Florian Hense Macro Views Download:  After the Brexit vote: assessing the domino risks
21.06.2016 GERMAN COURT LEAVES EUROPE'S SAFETY NET INTACT

Europe dodges another bullet. In its final verdict on the ECB’s “all it takes“ OMT programme, Germany’s Constitutional Court today rejected the legal challenges against the Eurozone’s premier safety net. Although the court did so with some unease and placed some limits on potential Bundesbank participation, the verdict allows the OMT to serve its purpose if it ever has to be activated.

Holger Schmieding Macro Flash Download:  GERMAN COURT LEAVES EUROPE'S SAFETY NET INTACT
20.06.2016 THE WEEK THAT COUNTS: UPDATE ON EUROPEAN RISKS

The week that counts has started. After a drubbing for Italy’s pro-European prime minister Renzi in local elections on 19 June, the German court verdict on the ECB's OMT programme on 21 June, the Brexit referendum on 23 June and the Spanish repeat elections on 26 June could make waves.

Holger Schmieding Macro Views Download:  THE WEEK THAT COUNTS: UPDATE ON EUROPEAN RISKS
20.06.2016 NOTES ON EUROPE

After two generations, the process of European integration as we know it seems to have reached its limits. European integration has been a response to the wars that ravaged the continent until 1945 and to the protectionism that wrecked many economies in the inter-war years.

Holger Schmieding Macro Views Download:  NOTES ON EUROPE
17.06.2016 The case against Brexit

Straight question, simple answer: Sometimes, the big decisions in life can be surprisingly simple. On 23 June, British voters will answer the question: do they want their country to stay in or leave the EU? To choose wisely,
they only need to look at a map.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  The case against Brexit
16.06.2016 Brexit update: UK polls now show small lead for “leave”

Brexit opinion polls now show “leave” marginally ahead: With 10 days to go until the UK’s “in” or “out” referendum on European Union (EU) membership, polls are showing a significant gain in support for “leave”, as
immigration has taken centre stage in the UK public debate.

Holger Schmieding, Kallum Pickering Macro Views Download:  Brexit update: UK polls now show small lead for “leave”
16.06.2016 The Brexit Brief: our guide to the “what if”?

A serious shock. If UK voters decide on 23 June to leave the European Union, the UK and, to a lesser extent, Europe as a whole could plunge into a significant crisis. Markets would price in the risks, possibly overdoing it in a first knee-jerk reaction.

Holger Schmieding, Kallum Pickering Macro Views Download:  The Brexit Brief: our guide to the “what if”?
10.06.2016 The Brexit risk: a domino effect across Europe?

What if? Could the precedent of a Brexit trigger domino effects across Europe, putting the cohesion of the European Union (EU) or the eurozone at serious risk? If the UK votes to leave the EU on 23 June, that would be the
main risk to watch for global markets and the global economy.

Holger Schmieding Chart of the Week Download:  The Brexit risk: a domino effect across Europe?
08.06.2016 UK INDUSTRIAL PRODUCTION: FASTEST GROWTH IN ALMOST 4 YEARS

Total production increased by 2.0% mom in April, the biggest increase since July 2012. Growth was significantly above estimates of 0.0% and followed a 0.3% rise in March. On a 3m/3m basis, industrial production grew for the first time since last November, up by 0.7% in April. Manufacturing - the largest industrial sector - increased by 2.3% between March and April, its fastest rate of growth since July 2012.

Kallum Pickering Macro Flash Download:  UK INDUSTRIAL PRODUCTION: FASTEST GROWTH IN ALMOST 4 YEARS
06.06.2016 BREXIT UPDATE: PUTTING RECENT POLL SHIFTS INTO CONTEXT

Has the Brexit risk risen? Probably not much. Opinion polls can be volatile. Even though our weighted average of online and telephone polls indicates the lowest level of support for ‘remain’ all year, analysis of the underlying poll trends does not point conclusively to a significantly higher Brexit risk.

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: PUTTING RECENT POLL SHIFTS INTO CONTEXT
06.06.2016 EUROPE: THE SIX-DAY CLUSTER OF RISKS

The German court verdict on the ECB's OMT programme on 21 June, the Brexit referendum on 23 June and the Spanish repeat elections on 26 June: Europe is heading for a six-day cluster of risks. We expect Europe to dodge the bullets again, as it has done so far.

Holger Schmieding Macro Views Download:  EUROPE: THE SIX-DAY CLUSTER OF RISKS
03.06.2016 BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY (CONTINUED)

Ahead of the UK’s ‘in or out’ European Union (EU) referendum on 23 June 2016, the debate about the costs and benefits of EU membership is often shrouded in myths rather than driven by facts. In a series of brief reports, we contrast such myths with reality.

In this analysis, we focus on the myths to which the debate has recently shifted: (1) the staple argument of the Leave campaign, EU migration and its effect on public services and housing, (2) Britain’s understanding of the European project, and (3) potential post-Brexit opportunities with the Commonwealth.

 

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY (CONTINUED)
03.06.2016 UK UPDATE: CONSUMERS RESILIENT AMID SHARP RISE IN UNCERTAINTY AHEAD OF EU REFERENDUM

There are widespread signs across the UK economy that Brexit jitters are starting to bite and that growth has slowed in the run up to the EU referendum on 23 June. While consumers remain relatively upbeat, political uncertainty has risen to the highest level on record. Short of a Brexit, we expect growth to snap back in the second half of the year.

Kallum Pickering Macro Flash Download:  UK UPDATE: CONSUMERS RESILIENT AMID SHARP RISE IN UNCERTAINTY AHEAD OF EU REFERENDUM
02.06.2016 ECB MAINTAINS DOVISH BIAS

Upon raising its projections for growth and inflation in 2016, the ECB maintained a decidedly dovish bias. While the ECB did not suggest at its press conference today that it may need to ease policy again, the ECB emphasised that it ‎is "willing, able and ready" to act if financial turmoil were to impair the transmission mechanism of monetary policy or if ultra-low inflation became too entrenched in inflation expectations.

Florian Hense Macro Flash Download:  ECB MAINTAINS DOVISH BIAS
31.05.2016 ECB PREVIEW: A TASTE OF SUCCESS

The economy is expanding at a satisfactory clip, the hypothetical deflation threat has receded and none of the risks that had roiled markets early this year has materialised. At its meeting in Vienna this Thursday, the ECB Council will not need to take any major decision.

Holger Schmieding Macro Flash Download:  ECB PREVIEW: A TASTE OF SUCCESS
30.05.2016 EUROZONE: DOMESTIC DEMAND DRIVES THE RECOVERY

Steady growth, more jobs, neither inflation nor deflation. While not exactly splendid, the outlook for the Eurozone economy is quite satisfactory. Supported by domestic demand, the Eurozone economy looks set to expand at a pace around its 1.6% trend rate later this year, in line with growth over the last five quarters.

Holger Schmieding Macro Flash Download:  EUROZONE: DOMESTIC DEMAND DRIVES THE RECOVERY
27.05.2016 "Remain" edging ahead: Brexit risk falls to 30%

Recent trends indicate that the risk of the UK voting to leave the European Union on 23 June has fallen. We thus reduce our probability of a Brexit from 35% to 30%.

Kallum Pickering Macro Flash Download:  "Remain" edging ahead: Brexit risk falls to 30%
27.05.2016 President Trump? A European perspective

Having spent a few days in the US after‎ travelling through Europe immediately before, we have been struck by a transatlantic gap in perceptions. In Europe, few people seem to believe that Donald Trump will be the next US president. In the US, however, many observers rate his chances of winning on 8 November at 40-45%.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  President Trump? A European perspective
26.05.2016 UK: MARKET TURMOIL AND BREXIT JITTERS HIT Q1 GDP GROWTH

The worst start to a year in financial markets since 2008 and heightened uncertainty over the UK’s fate in the EU damped growth momentum at the start of the year. Domestic demand provided all of the growth while trade dragged. The quarterly growth rate slowed to 0.4% in Q1 from 0.6% in Q4, in line with expectations.

Kallum Pickering Macro Flash Download:  UK: MARKET TURMOIL AND BREXIT JITTERS HIT Q1 GDP GROWTH
25.05.2016 GERMAN IFO SHOWS CONTINUED EXPANSION

May’s Ifo business climate reading suggests the German economy continues its growth path at a robust pace. After stronger-than-expected growth in the first quarter of 2016, the expansion is likely to slow in Q2. The risk of a sharp drop-off in Q2, and the rest of the year, is limited, provided that the subdued growth of economic activity in the rest of the Eurozone does not weaken further.

Florian Hense Macro Flash Download:  GERMAN IFO SHOWS CONTINUED EXPANSION
23.05.2016 The Euro Plus Monitor Spring 2016 Update

Once a year, Berenberg and the Lisbon Council examine the fundamental economic health and recent adjustment progress of 21 European economies. We published the last full set of results in The 2015 Euro Plus Monitor on 14 December 2015. In The Spring 2016 Update, we look only at the Adjustment Progress Indicator. In addition, we take advantage of recent data releases to update the rankings based on full data sets for 2015, including the second half of the year.

Holger Schmieding Macro Views Download:  The Euro Plus Monitor Spring 2016 Update
20.05.2016 The risk in Spain

A left-left alliance between Podemos and the Socialists remains a risk. But disagreement about Catalonia makes it unlikely that the Socialists would accept such a coalition, especially as they could well be the junior partner.

Holger Schmieding Chart of the Week Download:  The risk in Spain
18.05.2016 UK: LABOUR MARKET ADDS JOBS, WAGE GROWTH DIPS

The UK employment machine keeps on humming. Despite the market turmoil in Q1 and concerns about the Brexit referendum in Q2, UK firms continued to hire. The employment rate reached a record 74.2% in March after the economy added a further 44k jobs. The unemployment rate remained unchanged at 5.1% in March, in line with expectations and stable for the fourth consecutive month. Frustratingly, wage growth slowed despite the continued expansion in labour demand. Wage growth (ex bonuses) dipped to 2.1% yoy versus expectations of an acceleration to 2.3%, following growth of 2.2% in February.

Kallum Pickering Macro Flash Download:  UK: LABOUR MARKET ADDS JOBS, WAGE GROWTH DIPS
17.05.2016 UK INFLATION – DROP IN AIR FARES REVERSES MARCH GAINS

Inflation unexpectedly slowed to 0.3% in April from 0.5% in March. A 14.2% mom decline in air fares stripped away the 0.1 ppt air fares added in March - when they jumped temporarily due to the early Easter.  Declines in the prices of clothing, vehicles and social housing rent also contributed to the drop in the headline rate. Core inflation, which strips out the volatile energy and food components dropped to 1.2% in April from 1.5% in March - versus expectations of 1.4%.

Kallum Pickering Macro Flash Download:  UK INFLATION – DROP IN AIR FARES REVERSES MARCH GAINS
13.05.2016 UK households reverting to old habits: Is the recovery sustainable?

Consumer credit growth at a decade-high, saving at a record low. Should we worry? Probably not. Although households have not deleveraged as much as businesses - household debt as a percentage of GDP has fallen to 90% from its peak of 107% in 2009 – households’ ability to manage the debt has improved significantly. 

Kallum Pickering Chart of the Week Download:  UK households reverting to old habits: Is the recovery sustainable?
12.05.2016 UK: BOE CAUTIOUS OF BREXIT RISKS – NEXT MOVE LIKELY UP

The MPC made no policy changes at its May meeting. The nine member committee voted unanimously in favour of keeping the bank rate at 0.5% and maintaining the stock of QE assets at £375 billion. 

Kallum Pickering Macro Flash Download:  UK: BOE CAUTIOUS OF BREXIT RISKS – NEXT MOVE LIKELY UP
11.05.2016 UK INDUSTRIAL OUTPUT: THIRD SLUMP IN 8 YEARS

Hard times for UK production industries: Industrial output contracted by 0.4% qoq in Q1 2016. This follows a quarterly decline of 0.4% in Q4 2016. Manufacturing – the largest industrial sector - contracted by 0.5% qoq.

Kallum Pickering Macro Flash Download:  UK INDUSTRIAL OUTPUT: THIRD SLUMP IN 8 YEARS
11.05.2016 Brexit: Das Risiko des Jahres

Ein Schicksalstag für Europa? Am 23. Juni stimmen die britischen Wähler über den Verbleib ihres Landes in der Europäischen Union ab. Meinungsumfragen sagen einen knappen Ausgang voraus, das Risiko eines britischen Austritts („Brexit“) liegt unseres Erachtens bei 35 %.

Holger Schmieding Macro Views Download:  Brexit: Das Risiko des Jahres
11.05.2016 THE ECONOMICS OF BREXIT: A GERMAN VIEW

We see a 35% risk of Brexit. The British ‘in or out’ EU referendum on 23 June poses the top economic and political risk for Europe this year. Germany would love the UK to stay in the European Union. The UK is simply part of Europe. Managing relations with the UK is much easier in the established framework of the EU than it would be on an awkward bilateral basis.

Holger Schmieding Macro Flash Download:  THE ECONOMICS OF BREXIT: A GERMAN VIEW
09.05.2016 MACRO UPDATE: GREECE, FED, BREXIT CONTAGION RISKS, EUROZONE AND UK GDP

Last night, the Greek parliament approved a package of pension reforms and tax increases. The government managed to mobilise its majority of 153 out of 300 seats in parliament. 

Holger Schmieding Macro Flash Download:  MACRO UPDATE: GREECE, FED, BREXIT CONTAGION RISKS, EUROZONE AND UK GDP
09.05.2016 UK: MAY INFLATION PREVIEW - LOOKING THROUGH THE BREXIT JITTERS

Whilst we expect some downward revisions to the current assessment of growth and some wariness by the MPC about the impact of Brexit uncertainty on domestic demand, we would not read too much into a dovish tone. We address these issues one by one as we discuss what to look for in the May Inflation Report on Thursday.

Kallum Pickering Macro Flash Download:  UK: MAY INFLATION PREVIEW - LOOKING THROUGH THE BREXIT JITTERS
06.05.2016 Forecasts at a glance - Modest growth amid serious political risks

Outlook: Developed world continues to recover, emerging markets hit bottom
●   US: Consumption and housing solid, exports and investment weak
●   China: Decelerating growth but no hard landing
●   Japan: Struggling to grow, yen strength hurts
●   Eurozone: Modest but largely balanced recovery continues
●   UK: Moderate economic recovery continues, 35% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  Forecasts at a glance - Modest growth amid serious political risks
06.05.2016 UK and Eurozone: mind the gap

Better off alone? Advocates of Brexit often claim that the UK would be better off if it detached itself more from an allegedly dysfunctional Eurozone and linked itself closer to faster-growing regions of the world instead. Strictly speaking, the assertion does not make sense.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  UK and Eurozone: mind the gap
05.05.2016 UK UPDATE: SERVICES PMI AT 3 YEAR LOW ON BREXIT JITTERS, NO NEED TO PANIC

The lowest reading for the UK services PMI since February 2013 makes for three in a row after construction and manufacturing indices also came in below expectations earlier in the week. The headline index for services was 52.3 in April, below the consensus of 53.5.

Kallum Pickering Macro Flash Download:  UK UPDATE: SERVICES PMI AT 3 YEAR LOW ON BREXIT JITTERS, NO NEED TO PANIC
03.05.2016 Forecasts at a glance - Modest growth amid serious political risks

Outlook: Developed world continues to recover, emerging markets hit bottom
•      US: Sound fundamentals, domestic demand resilient but exports drag
•      China: Decelerating growth but no hard landing
•      Japan: Struggling to sustain growth, reforms needed
•      Eurozone: Modest but largely balanced recovery continues
•      UK: Moderate economic recovery continues, 35% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  Forecasts at a glance - Modest growth amid serious political risks
29.04.2016 Brexit polls: beware of apples and oranges

Is the Brexit risk receding? The sterling exchange rate, bookmakers’ odds and opinion polls have moved that way in recent weeks. But the actual shift in opinion polls has been smaller than some of the press reports may suggest.

Kallum Pickering Chart of the Week Download:  Brexit polls: beware of apples and oranges
29.04.2016 EUROZONE OUTLOOK: A FIRMER RECOVERY

Good news from the Eurozone. One by one, the pieces are falling into place. After a soft patch in the second half of 2015, the Eurozone is returning to trend growth of roughly 1.6% yoy.

Holger Schmieding Macro Flash Download:  EUROZONE OUTLOOK: A FIRMER RECOVERY
28.04.2016 GERMAN LABOUR MARKET: SOLID TREND

Despite the recent drop in exports to China and other emerging markets, Germany continues to create ever more jobs. Strong gains in real disposable incomes and a fiscal stimulus of at least 0.5% of GDP for 2016 point to further gains ahead. In turn, solid employment growth will underpin consumer spending, helping to cushion the German economy somewhat against external shocks.

Holger Schmieding Macro Flash Download:  GERMAN LABOUR MARKET: SOLID TREND
28.04.2016 What drives the UK current account deficit?

The UK current account deficit has widened sharply from an average of 2.3% of GDP between 2001 and 2010, to a record of 7.0% in Q4 2015. Two trends are behind this negative outcome.

Kallum Pickering UK Macro Update Download:  What drives the UK current account deficit?
28.04.2016 THE POLITICS OF BREXIT: A GERMAN VIEW

For once, let me start with the disclaimer: I am a German who has spent half of his adult life in London. That may colour my perspective. I am amazed by the current German backlash against the ECB, the only central bank that has ever‎ delivered a prolonged period of price stability for Germany. In the same way, I am amazed by some English views of the European Union which also seem to be partly based on a somewhat peculiar interpretation of European facts. Let me offer a German-inspired view of the Brexit debate.

Holger Schmieding Macro Flash Download:  THE POLITICS OF BREXIT: A GERMAN VIEW
27.04.2016 ECB POLICY IS WORKING AS CREDIT CYCLE TURNS UP GRADUALLY

Monetary policy is working in the Eurozone. While less effective than in the past, the ECB’s stimulus is yielding results. In March, credit growth in the Eurozone strengthened slightly further.

Holger Schmieding Macro Flash Download:  ECB POLICY IS WORKING AS CREDIT CYCLE TURNS UP GRADUALLY
27.04.2016 UK GDP SLOWDOWN - NO CAUSE FOR CONCERN

GDP growth slowed from 0.6% qoq in Q4 to 0.4% qoq in Q1, in line with estimates. This is not a cause for concern. The slowdown was caused by largely idiosyncratic and transitory risks, namely the financial market rout at the start of the year and the forthcoming EU referendum on June 23.

Kallum Pickering Macro Flash Download:  UK GDP SLOWDOWN - NO CAUSE FOR CONCERN
25.04.2016 UK: Obama signals Brexit could change the 'special relationship'

Pro-EU Prime Minister Cameron couldn’t have asked for more. On his visit to London, US President Obama plainly stated that he thought the UK should vote to stay in the EU, and that it would be in the interests of the UK, the EU and the US for the UK to do so.

Kallum Pickering Macro Flash Download:  UK: Obama signals Brexit could change the 'special relationship'
22.04.2016 Chart of the week - Eurozone outlook: first signs of spring?

A series of concerns rocked markets in early 2016: Low oil prices may be bad even for oil-importing countries, China may suffer a hard landing, the crisis in other emerging markets may deepen, the US may fall into recession, and the Eurozone may succumb to deflation amid a worsening banking crisis.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  Chart of the week - Eurozone outlook: first signs of spring?
22.04.2016 BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY

Ahead of the UK referendum about staying in or leaving the European Union (EU) on 23 June 2016, the debate about the costs and benefits of EU membership is often shrouded in myths rather than driven by facts or reasonable arguments. In a series of brief reports, we will contrast such myths with reality in the coming eight weeks.

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: THE ECONOMIC MYTHS THAT CONCEAL REALITY
21.04.2016 ECB KEEPING ITS OPTIONS OPEN

No surprises today from the ECB. All key rates and policy measures remain unchanged following the vast expansion the ECB delivered on the 10th of March. Draghi said that rates will need to stay at current levels ‘or lower’ beyond the specified horizon for QE (March 2017), adding that QE will run until the ECB sees a ‘sustained inflation adjustment’.

Kallum Pickering Macro Flash Download:  ECB KEEPING ITS OPTIONS OPEN
20.04.2016 GERMANY VERSUS ECB: HOW DANGEROUS IS THE DISPUTE?

Careful what you wish for. For decades, Germans strongly believed in price stability and an independent central bank. Fate and the European Central Bank (ECB) have granted them both wishes. Prices are more stable than ever before. And the ECB is so stubbornly independent and focussed on its price stability mandate that it rejects all suggestions to gear its monetary policy towards other objectives such as creating more jobs in France or guaranteeing a risk-free interest income for savers in Germany.

Holger Schmieding Macro Flash Download:  GERMANY VERSUS ECB: HOW DANGEROUS IS THE DISPUTE?
20.04.2016 UK: LABOUR MARKET COOLS AHEAD OF EU REFERENDUM

The headline rate of unemployment was 5.1% in the three months to February, in line with estimates and stable for a fourth consecutive month. Although data showed that the number of people looking for work rose modestly (21k) compared to the three months to November, the number was down by 142k compared to a year ago.

Kallum Pickering Macro Flash Download:  UK: LABOUR MARKET COOLS AHEAD OF EU REFERENDUM
18.04.2016 EU referendum: Panama scandal hits polls - Obama to the rescue

The recent terror attacks in Brussels and David Cameron's hesitant reaction to the Panama leaks have led to a rise in support for a Brexit. Should we be worried? Probably not much. Firstly, this is not the first time negative news have affected the polls (see chart). Secondly, recent history tells us that these shifts usually prove to be temporary. On this occasion, we expect history to repeat itself.

Kallum Pickering Macro Flash Download:  EU referendum: Panama scandal hits polls - Obama to the rescue
18.04.2016 EUROPEAN POLITICAL UPDATE: BREXIT, POPULISM AND OTHER RISKS

Although the migrant crisis is receding from the headlines as the flow of migrants from Turkey into Greece has slowed to daily trickle of around 100 from a peak of 7000 last October, political risks continue to loom large in Europe. Rampant populism and potential policy mistakes may still jeopardise the cohesion of Europe that underpins the region’s prosperity.

Holger Schmieding Macro Flash Download:  EUROPEAN POLITICAL UPDATE: BREXIT, POPULISM AND OTHER RISKS
15.04.2016 Current account deficit: the UK's problem with Europe

The UK has been a serial debtor since 1998: That was the last time the UK managed a current account surplus. In the decade before the financial crisis, strong economic growth and solid returns on foreign assets enabled the UK to sustain an overdraft with the rest of the world with little risk. The deficit improved briefly following the 2008 financial crisis after a rapid response by the Bank of England (BoE) sent trade-weighted sterling down 20%, making imports less attractive. Today’s problem started in 2011. As our chart shows, the UK’s current account deficit has widened in each year since. By Q4 2015, it had bulged to a record 7% of GDP.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  Current account deficit: the UK's problem with Europe
14.04.2016 BOE IN ‘WAIT AND SEE’ MODE UNTIL BREXIT RISKS PASS

With a little over two months to go before the EU referendum (23 June), minutes from the April meeting show that Britain’s MPC is firmly in ‘wait and see’ mode until the outcome of the vote is clear. Expectedly, the MPC voted unanimously in favour of keeping the policy rate on hold at 0.5% and in favour of maintaining the stock of QE assets at £375 billion.

Kallum Pickering Macro Flash Download:  BOE IN ‘WAIT AND SEE’ MODE UNTIL BREXIT RISKS PASS
12.04.2016 UK INFLATION RECOVERING - FIRST HIKE LIKELY IN NOVEMBER

In March, inflation increased by 0.2 ppt mom to 0.5%, above estimates of 0.4%. The headline rate has now increased by 0.6 ppt from a low of -0.1 ppt last October. Core inflation, which excludes volatile components like energy and food, surprised on the upside too. Core inflation increased to 1.5% yoy, 0.2 ppt higher than in February and 0.1 ppt above estimates. 

Kallum Pickering Macro Flash Download:  UK INFLATION RECOVERING - FIRST HIKE LIKELY IN NOVEMBER
08.04.2016 GELDPOLITIK DER EZB: DIE FAKTEN GEBEN DRAGHI RECHT

Seit die Europäische Zentralbank am 10. März 2016 ihren wichtigsten Leitzins von 0,05 % auf 0,00 % gesenkt hat, schwillt die Kritik an ihrer Politik immer mehr an. Die EZB verletze ihr Mandat, enteigne die deutschen Sparer, subventioniere marode Staaten und Schrottbanken in Südeuropa auf Kosten Deutschlands und blähe gefährliche Blasen an den Vermögensmärkten auf. So lauten die üblichen Vorwürfe gerade in der deutschen Debatte.

Holger Schmieding Eurozone Update Download:  GELDPOLITIK DER EZB: DIE FAKTEN GEBEN DRAGHI RECHT
08.04.2016 European migrant crisis: a welcome respite

Can Europe get to grips with the migrant crisis? Doing so may be crucial for the political future of Europe. The emotion-stirring migration issue is a factor in the UK debate ahead of the referendum on 23 June about staying in the European Union. It has also energised the eurosceptics in the Netherlands, who have gained a clear majority in a non-binding referendum on 6 April to reject the EU’s association agreement with Ukraine. Amid a low turnout of just 32.2%, most mainstream voters did not bother to cast a ballot.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  European migrant crisis: a welcome respite
08.04.2016 TRADE AND INDUSTRIAL DATA HIGHLIGHT WEAKSPOTS IN UK ECONOMY

Industrial weakness could present some downside risk to first quarter growth. Industrial output declined by 0.3% mom in February, against consensus expectations of a modest rise of 0.1%. Comparing the first two months of the year to the final quarter of 2015 shows industrial output declined by 1.0%.

Kallum Pickering Macro Flash Download:  TRADE AND INDUSTRIAL DATA HIGHLIGHT WEAKSPOTS IN UK ECONOMY
04.04.2016 UK UPDATE: BEYOND THE BREXIT RISK - FIRST RATE HIKE IN NOVEMBER

When considering the upcoming EU referendum on June 23 we need to remember two things: (1) To subtract the noise and instead focus on the underlying trend when assessing the real risk of a Brexit – the UK remaining in the EU is still the most likely outcome. (2) To still pay attention to the other key risks and trends for the UK economy in 2016.

Kallum Pickering Macro Flash Download:  UK UPDATE: BEYOND THE BREXIT RISK - FIRST RATE HIKE IN NOVEMBER
01.04.2016 Cyprus versus Greece: a lesson in Eurozone reform

Three years after falling into a deep crisis, Cyprus has successfully left its EU-IMF adjustment programme. Following the return to growth last year, corporate confidence has surged to its best level since September 2008. The island at the Eurozone periphery is on track for a long and strong recovery.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  Cyprus versus Greece: a lesson in Eurozone reform
31.03.2016 UK GDP- NICE RECOVERY BUILT ON SAND

2015 UK GDP growth revised up 0.1ppt to 2.3% in 2015 - driven by domestic forces while trade dragged. The UK economy expanded by 0.6% qoq in the final quarter, revised up from the previous estimate of 0.5%. On an annual basis, total output increased by 2.1% in Q4 (up from 1.9%). Following on the general trend for the year, consumption - this accounts for 65% of GDP - increased by 0.6% qoq, boosted by labour market gains and a tailwind from cheap oil.

Kallum Pickering Macro Flash Download:  UK GDP- NICE RECOVERY BUILT ON SAND
31.03.2016 GOOD FOR EUROPE: GERMANY'S JOBS MACHINE KEEPS HUMMING

Despite a temporary slowdown in growth caused by China and the crisis in some other emerging markets, Germany continues to create ever more jobs. Strong gains in real disposable incomes and a fiscal stimulus of at least 0.5% of GDP for 2016 point to further strength ahead. In turn, solid employment growth will underpin consumer spending, helping to cushion the German economy somewhat against external shocks. The robust labour market is largely the result of Germany’s sweeping “Agenda 2010” labour market reforms of 2004. German domestic demand looks set to remain a pillar of strength at the core of Europe.

Holger Schmieding Macro Flash Download:  GOOD FOR EUROPE: GERMANY'S JOBS MACHINE KEEPS HUMMING
30.03.2016 EUROZONE CONFIDENCE: NO SPRING YET

Spring has not come to the Eurozone economy yet. Instead, economic sentiment fell modestly again in March for the third time in a row, from 103.9 in February to 103.0 now. This most encompassing survey of current economic conditions suggests that GDP growth remains below its 1.6% trend rate. We expect lessening concerns about China and oil as well as the tailwinds from modest fiscal easing and the additional ECB stimulus to lift growth back to its trend by mid-year. But this process has not started yet. As a small consolation for the ECB, selling-price expectations edged up slightly in industry and the services sector following the rebound in oil prices.

Holger Schmieding Macro Flash Download:  EUROZONE CONFIDENCE: NO SPRING YET
29.03.2016 ECB: MONETARY POLICY IS STILL WORKING

“Monetary policy is no longer working. Instead, ECB attempts to support demand and nudge inflation gradually back to the desired rate of close to 2% are merely creating dangerous distortions.” These assertions have turned into the standard refrain of many observers, sung most loudly in the German debate. The facts including today’s money and credit data show that the refrain is wrong. ECB policies are still working.

Holger Schmieding Macro Flash Download:  ECB: MONETARY POLICY IS STILL WORKING
22.03.2016 Notes on the consequences of terror attacks

Not for the first time, we have to consider the potential economic and political effects of terror. Resilience is part of human nature. Individual ‎terror attacks usually do not change underlying economic trends. That at least was the clear lesson of the terror attacks on Madrid and London in 2004 and 2005.

Holger Schmieding Macro Flash Download:  Notes on the consequences of terror attacks
18.03.2016 Production rising in most industries

Industrial production fell 0.5% in February, lowering its year-on-year change to -1.0%. Does this confirm the worst fears that the US economy is slumping and the decline in production will spread to consumption and drag the economy into recession? Absolutely not.

Mickey Levy Chart of the Week Download:  Production rising in most industries
18.03.2016 ECONOMIC CALENDAR - WEEK OF 20 MARCH

• GE, IFO business climate/current assessment/expectations (22 March)
• US, Arizona primary, Utah caucuses and Idaho Democratic caucus (22 March)
• US, GDP/personal consumption (25 March)
• US, Alaska, Hawaii and Washington State Democratic caucuses (26 March)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 20 MARCH
18.03.2016 EU DEAL WITH TURKEY: CONTAINING THE MIGRANT CRISIS

The EU and Turkey strike a deal: Turkey agrees to take back “all new irregular migrants” crossing from Turkey into Greek islands as of 20 March; the EU offers Turkey the chance to get visa-free travel for Turks to the EU by the end of June if Turkey meets the required conditions. The EU will also pay Turkey up to €6bn by 2018 to sustain the roughly 2.7 million Syrian refugees in Turkey and will take (initially) up to 72k Syrian refugees from Turkey in an orderly resettlement procedure. What does the deal mean?

Holger Schmieding Macro Flash Download:  EU DEAL WITH TURKEY: CONTAINING THE MIGRANT CRISIS
16.03.2016 UK BUDGET 2016 - NO GAME CHANGERS FOR GROWTH

No gamer changer: Osborne delivered some nice reforms to boost businesses and help households. However, the cash shortage was also plain to see. The Chancellor announced a package of measures aimed at making the UK a better place for business, helping households save more, accelerating devolution within the UK and boosting productivity. But overall, the economic downgrades severely constrained the Chancellor’s capacity to make significant changes. All in all, today’s announcements probably do not mean much for the economic outlook.

Kallum Pickering Macro Flash Download:  UK BUDGET 2016 - NO GAME CHANGERS FOR GROWTH
16.03.2016 POLITICAL UPDATE: US RISKS, EUROPEAN MIGRANT CRISIS, PUTIN, MERKEL

Clinton extends her lead over Sanders and looks set to be the Democratic nominee; Trump wins four of five primaries and edges closer to the Republication nomination despite losing Ohio to Kasich. Bookmakers and electronic markets suggest that Clinton is the clear favourite to be the next US president.

Holger Schmieding Macro Flash Download:  POLITICAL UPDATE: US RISKS, EUROPEAN MIGRANT CRISIS, PUTIN, MERKEL
15.03.2016 US consumption will remain healthy

Retail sales dipped by 0.1% in February, but “core” sales, excluding motor vehicles, gasoline and building materials, rose by 0.2% and are up by 3.5% year-over year. Like other high-frequency data, these monthly retail sales bounce around a lot.

Mickey Levy Global Macro Update Download:  US consumption will remain healthy
15.03.2016 UK BUDGET 2016 - WHAT TO EXPECT

When a government needs to cut spending, the first budget after the election is the most important one. Announcing the big cuts as early as possible provides the most time before the next election to win back the favour of voters. But what do we know going into this year’s budget?

Kallum Pickering Macro Flash Download:  UK BUDGET 2016 - WHAT TO EXPECT
14.03.2016 The day after Brexit: what would happen next?

In the short-run, a vote for Brexit would be a demand-side shock: A sharp rise in uncertainty would harm business and household confidence, causing investment and spending to decline. Growth slows (recession possible), unemployment rises, the Bank of England (BoE) loosens monetary policy and fiscal deficits rise.

Kallum Pickering UK Macro Update Download:  The day after Brexit: what would happen next?
14.03.2016 GERMAN STATE ELECTIONS: SERIOUS SETBACK FOR MERKEL

A serious setback for Merkel as many voters reject her migration policies. At the "Super Sunday" elections in three of Germany's 16 federal states, Merkel’s CDU fared even worse and the anti-foreigner AfD garnered even significantly more votes than most opinion polls had projected‎. The result will add to the unease within Merkel's centre-right party about her migration policies. But even this protest vote is unlikely to put her job as chancellor at risk.

Holger Schmieding Macro Flash Download:  GERMAN STATE ELECTIONS: SERIOUS SETBACK FOR MERKEL
11.03.2016 GERMAN POLITICS: SUPER SUNDAY PREVIEW

If opinion polls are any guide, chancellor Merkel’s CDU could suffer a major setback at elections in three of Germany’s 16 federal states this Sunday. If so, this will trigger some unsettling headlines and possibly even speculation that her position may be at risk. As she has once been dubbed “the indispensable European” even by the comparatively well informed and usually sober “Economist” magazine, that could cause concerns well beyond Germany.

Holger Schmieding Macro Flash Download:  GERMAN POLITICS: SUPER SUNDAY PREVIEW
11.03.2016 Good news: ECB catching up with the Fed

A succession of scares haunted global markets in the first six weeks of 2016: China is heading for a crash, low oil prices will hurt oil producers by more than they benefit consumers, the US could plunge into recession and the Eurozone may be facing another systemic banking crisis. The economic basis for these concerns always looked very flimsy. One by one, these concerns are now being debunked by reality and policy makers

Holger Schmieding, Kallum Pickering Chart of the Week Download:  Good news: ECB catching up with the Fed
11.03.2016 UK TRADE: WIDENING EU GOODS DEFICIT WILL ADD FUEL TO THE BREXIT CAMP

Trade deficit may ease further in coming months before widening in H2: After sharp downward revisions to back data, the UK trade deficit in goods and services narrowed to a five month low of £3.5b in January from £3.7bn in December, mostly due to a reduction in imports. Comparing January to the average monthly balance for the final quarter of last year, the trade balance improved by £700m with imports down by around £1b.

Kallum Pickering Macro Flash Download:  UK TRADE: WIDENING EU GOODS DEFICIT WILL ADD FUEL TO THE BREXIT CAMP
10.03.2016 ECB: GOING ALMOST TO THE LIMIT

Wow. In almost every respect, the ECB went beyond expectations today. That holds for the scope and breadth of its monetary policy measures as well as for the generous details of its LTRO liquidity injections and its forward guidance on interest rates. According to ECB president Draghi, the Governing Council adopted the comprehensive package with “an overwhelming majority”.

Holger Schmieding Macro Flash Download:  ECB: GOING ALMOST TO THE LIMIT
09.03.2016 CENTRAL BANKS: WHAT THEY CAN AND CANNOT DO

As the European Central Bank (ECB) looks set to ease its monetary policy even further on 10 March, ‎the discussion about what central banks can and cannot achieve is veering into ever wilder directions. Some pundits claim that central banks have lost much of their erstwhile power; others accuse them of expropriating hapless savers. Some observers even suggest that it would take a tighter rather than looser policy to support demand. To assess these claims, we need to recall some basic points about monetary policy.

Holger Schmieding Macro Flash Download:  CENTRAL BANKS: WHAT THEY CAN AND CANNOT DO
09.03.2016 UK UPDATE: MANUFACTURING WEAKNESS NOT A SERIOUS RISK

Industrial output turns positive after a two month dip but it won’t last: Industrial output grew by 0.3% yoy in January after contracting by 1.1% in December and 0.8% in November. Growth was slightly below expectations and comparing January to the Q4, industrial output contracted by 0.8%.

Kallum Pickering Macro Flash Download:  UK UPDATE: MANUFACTURING WEAKNESS NOT A SERIOUS RISK
07.03.2016 MONDAY MACRO UPDATE: EU-TURKEY SUMMIT, ECB, US AND EUROPEAN DATA

Europe has started to tackle the migrant crisis in earnest. With luck, the EU and Turkey may strike a deal at their summit in Brussels today. The EU wants Turkey to (i) reduce illegal border crossings into Greece from the current daily rate of some 2000 to far less than 1000 a day and (ii) to take back migrants with no claim for asylum in the EU (that is, broadly speaking, to take back almost all non-Syrians who manage to cross the sea from Turkey to Greece). In return, the EU offers €3bn+ in cash for Turkey to take care of Syrian refugees in Turkey and visa-free travel for Turks to the EU from late 2016 onwards.

Holger Schmieding Macro Flash Download:  MONDAY MACRO UPDATE: EU-TURKEY SUMMIT, ECB, US AND EUROPEAN DATA
07.03.2016 ECONOMIC CALENDAR - WEEK OF 7 MARCH

• Britain beware: the power of trade diversion
• European migrant crisis: Crunch time ahead
• UK manufacturing: Signs of strain
• Eurozone outlook: Back to trend growth by mid-2016
• UK services PMI sinks to near 3 year low

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 7 MARCH
04.03.2016 Britain beware: the power of trade diversion

How would the UK fare outside the EU? Nobody knows for sure. A divorce can be smooth, causing only modest damage. Or it can be messy, inflicting serious pain on everybody except the lawyers. It would all depend on the policy choices taken by both sides following a vote for Brexit on 23 June 2016.

Holger Schmieding Chart of the Week Download:  Britain beware: the power of trade diversion
03.03.2016 UK SERVICES PMI SINKS TO NEAR 3 YEAR LOW

No escape from global risks for UK services: The headline services PMI index for February came in at its lowest rate since March 2013. The index was below the long-run trend of 55.2, below our expectations of 55.0 and below January’s figure of 55.6.

Kallum Pickering Macro Flash Download:  UK SERVICES PMI SINKS TO NEAR 3 YEAR LOW
02.03.2016 EUROZONE OUTLOOK: BACK TO TREND GROWTH BY MID-2016

The renewed concerns about China, oil and banks will likely keep growth subdued until mid-2016, as explained when we reduced our forecasts 3 weeks ago. The decline in key economic surveys in February suits this view. We expect growth to return to trend, that is to an annualised rate of 1.6%, by mid-2016 unless a major new shock such as a Brexit chokes off the likely rebound in confidence.

Holger Schmieding Macro Flash Download:  EUROZONE OUTLOOK: BACK TO TREND GROWTH BY MID-2016
01.03.2016 Low inflation worries are excessive

The low inflation has been a positive for economic performance. The US and Europe benefit from lower energy prices and technology innovations that have reduced prices of goods and services.

Mickey Levy Global Macro Update Download:  Low inflation worries are excessive
01.03.2016 UK MANUFACTURING: SIGNS OF STRAIN

Weaker domestic and foreign demand leads to sharp drop in manufacturing: In February, the headline PMI index fell to its lowest level since April 2013.

Kallum Pickering Macro Flash Download:  UK MANUFACTURING: SIGNS OF STRAIN
29.02.2016 EUROPEAN MIGRANT CRISIS: CRUNCH TIME AHEAD

The migrant crisis poses a more serious challenge to the political cohesion and economic future of Europe than the overhyped‎ euro crisis ever did. Even the outcome of Britain’s Brexit referendum on 23 June 2016 may hinge on it. Some key issues will likely come to a head shortly.

Holger Schmieding Macro Flash Download:  EUROPEAN MIGRANT CRISIS: CRUNCH TIME AHEAD
26.02.2016 BREXIT RISK "POUNDS" STERLING - IS IT AN EARLY WARNING SIGN?

Warning signs come in threes: A drop in March consumer confidence, contracting business investment in Q4 2015 and sterling at a three-year low give a sense of what could be store for the UK economy should it vote for Brexit on 23 June. In a market that puts a heavy penalty on uncertainty, a Brexit could provide the tinder, the wood, the petrol and the matches to light a fire under the UK economy.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  BREXIT RISK "POUNDS" STERLING - IS IT AN EARLY WARNING SIGN?
26.02.2016 UK Q4 GDP: GROWTH ACCELERATED BUT RISKS HIT INVESTMENT

Q4 GDP - investment declined on heightened risks but consumer spending remained resilient. UK GDP growth accelerated to 0.5% qoq in Q4 2015 from 0.4% in Q3. This was unchanged from the previous estimate and in line with expectations. On an annual basis the economy grew by 1.9% in the final quarter.

Kallum Pickering Macro Flash Download:  UK Q4 GDP: GROWTH ACCELERATED BUT RISKS HIT INVESTMENT
26.02.2016 ECB: WHAT TO DO ON 10 MARCH?

The European Central Bank will scale up its monetary stimulus on 10 March. While the ECB will likely deliver a more convincing package than in December, the ECB will probably not break new ground by buying corporate bonds including senior bank bonds. We expect the ECB's package to combine additional bond purchases ‎with a more negative deposit rate and a targeted measure to address the exaggerated concerns about the health of the Eurozone banking system.

Holger Schmieding Macro Flash Download:  ECB: WHAT TO DO ON 10 MARCH?
24.02.2016 CAMERONS DEAL CAN HELP TO PREVENT BREXIT

The renegotiated terms of membership to keep the UK in the European Union are positive. They advance Britain‘s economic and political interests within the EU and globally. Prime Minister David Cameron got what he wanted. After a noisy fight, he secured most of the changes to Britain’s terms of EU membership that he had asked for. He now has to sell this deal to his cabinet ministers and the British public.

Kallum Pickering Macro Flash Download:  CAMERONS DEAL CAN HELP TO PREVENT BREXIT
24.02.2016 ECONOMIC CALENDAR - WEEK OF 22 FEBRUARY

• EZ, PMI manufacturing (22 February)
• EZ, ECB Lautenschläger speaks in Stuttgart (22 February)
• GE, GDP/IFO business climate (23 February)
• UK, BOE Carney speaks before UK parliament committee (23 February)
• US, FED Fischer speaks in Houston (23 February)
 UK, GDP (25 February)
• EZ, CPI (25 February)
• US, GDP (26 February)
• US, South Carolina Democratic primary (27 February)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 22 FEBRUARY
19.02.2016 EUROPEAN POLITICS: THE BIG ISSUE

Mind the politics: Market concerns that the slowdown in China, the fallout from cheap oil or banking issues could choke off the economic upswing in the western world are far overdone. These concerns will likely cause no more than a short-term dent in growth. As highlighted before, the real risk is that of a political accident.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  EUROPEAN POLITICS: THE BIG ISSUE
19.02.2016 UK CONSUMERS UNSHAKEN BY MARKET TURMOIL

If consumption is the backbone of the UK economy, then retail spending is the canary in the coalmine. Retail sales volumes excluding auto fuel grew for a 33rd consecutive month yoy in January, increasing 5.0% versus expectations of 3.4% and up significantly on the December slowdown of 1.8%.

Kallum Pickering Macro Flash Download:  UK CONSUMERS UNSHAKEN BY MARKET TURMOIL
18.02.2016 BREXIT UPDATE: DEAL LIKELY AT EU SUMMIT

At the two day EU summit beginning today, UK Prime Minister David Cameron will look to secure a deal on the set of renegotiated terms outlined in a letter from EU President Donald Tusk. If he is successful, this will most likely mean a summer referendum – probably June 23 – when the UK will vote on whether or not it should remain in the EU.

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: DEAL LIKELY AT EU SUMMIT
17.02.2016 UK LABOUR MARKET ENDED 2015 ON A HIGH

After strong gains in 2015, employment growth is likely to slow going forward: After the impressive gains in employment in 2015 the UK market is likely to step down a gear in 2016. In December, UK unemployment remained unchanged at 5.1%, in line with our expectations but slightly above consensus

Kallum Pickering Macro Flash Download:  UK LABOUR MARKET ENDED 2015 ON A HIGH
16.02.2016 UK INFLATION: A VERY GRADUAL RECOVERY

Is the recovery in inflation underway? Yes but very slowly. Headline inflation increased for the third consecutive month in January, reaching its highest rate since January 2015. Headline CPI was 0.3% yoy, up from 0.2% yoy in December and in line with consensus. 

Kallum Pickering Macro Flash Download:  UK INFLATION: A VERY GRADUAL RECOVERY
16.02.2016 EUROPEAN UPDATE: GERMAN COURT, EU SUMMIT ON BREXIT AND REFUGEES

This week could be noisy in Europe. While the ECB is preparing a new stimulus for its 10 March meeting, Germany’s Constitutional Court holds a hearing on the ECB’s OMT programme today at 09:00h GMT. The criticism of the ECB likely to be voiced at that hearing could make some headlines. Even more importantly, EU leaders will try to tackle the thorny and interrelated issues of a new deal for Britain to avoid Brexit and of containing the refugee crisis at their summit on Thursday and Friday.

Holger Schmieding Macro Flash Download:  EUROPEAN UPDATE: GERMAN COURT, EU SUMMIT ON BREXIT AND REFUGEES
15.02.2016 FORECASTS AT A GLANCE: TEMPORARY DENT TO GROWTH AS TURMOIL TAKES ITS TOLL

Outlook: Developed world slows temporarily, emerging markets hit trouble
●   US: Sound fundamentals, domestic demand resilient but exports drag
●   China: Decelerating growth but no hard landing
●   Japan: Struggling to sustain growth, reforms needed
●   Eurozone: Near-term dent to growth as market turmoil hits confidence
●   UK: Moderate economic recovery continues, 35% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: TEMPORARY DENT TO GROWTH AS TURMOIL TAKES ITS TOLL
15.02.2016 ECONOMIC CALENDAR - WEEK OF 15 FEBRUARY

• UK, CPI/CPI core (16 February)
• EZ, ZEW survey expectations  (16 February)
• GE, ZEW survey current situation/ZEW survey expectations (16 February)
• US, Industrial production (17 February)
• US, CPI (19 February)
• EZ, Consumer confidence (19 February)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 15 FEBRUARY
12.02.2016 ECONOMICS - FORECAST UPDATE: TURMOIL TAKES ITS TOLL

Fundamentals in the Western world remain positive. The stock market correction dampens the near-term outlook but chances of a recession are low. Fundamentals point to sustained moderate economic growth driven by domestic demand. Real incomes and employment are rising on both sides of the Atlantic, monetary policy is accommodative and the Eurozone benefits from a fiscal stimulus of some 0.3% of GDP in 2016. We detect no domestic imbalances or credit excesses serious enough to require a cleansing recession in the Western world.

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  ECONOMICS - FORECAST UPDATE: TURMOIL TAKES ITS TOLL
10.02.2016 BOJ's NEGATIVE RATES: LESSONS FOR MONETARY POLICY

What are the implications of the Bank of Japan (BoJ) joining the European Central Bank and central banks of Sweden, Denmark and Switzerland to impose negative rates on new excess bank reserves? The BoJ’s negative rates are more a reflection of Japan’s poor policies and economic performance than a cure. They do not address Japan’s problems and have unintended negative side effects. This sends an important lesson to global monetary and economic policymakers.

Mickey Levy Global Macro Update Download:  BOJ's NEGATIVE RATES: LESSONS FOR MONETARY POLICY
09.02.2016 NOTES ON FINANCIAL TURMOIL

After the sharp sell-off in markets, we need to get back to an old analogy: if the fire alarm goes off in a crowded room, we face two risks. First, there may actually be a dangerous fire. Second, even if there is no dangerous fire, people may hurt each other as they scramble for the exit.

Holger Schmieding Macro Flash Download:  NOTES ON FINANCIAL TURMOIL
05.02.2016 US EMPLOYMENT GAINS IN JANUARY CONSISTENT WITH MODERATE GROWTH

Job gains averaged 228,000 per month in the US in 2015. Such gains were too rapid relative to the moderate 1.8% real GDP growth measured Q415/Q414. Job gains were particularly strong in the fourth quarter when gains averaged 292,000, while real GDP rose by a scant 0.7% on an annualised basis and final sales to domestic purchasers rose by 1.6%. 

Mickey Levy Chart of the Week Download:  US EMPLOYMENT GAINS IN JANUARY CONSISTENT WITH MODERATE GROWTH
05.02.2016 ECONOMIC CALENDAR - WEEK OF 8 FEBRUARY
  • GE, Industrial production/Trade balance (9 February)
  • GE, GDP (12 February)
  • IT, GDP (12 February)
  • Eurozone, Industrial production/GDP (12 February)
  • US, Retail sales advance/U. of Mich. sentiment (12 February)
  • JP, GDP (14 February)
Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 8 FEBRUARY
04.02.2016 UK INFLATION REPORT: DOVISH OVERALL BUT CARNEY SAYS ‘NOT ENOUGH TIGHTENING’ IN MARKET EXPECTATIONS

MPC downgrades outlook for inflation but states ‘we don’t achieve our objective’ with the market implied path. The further ‘scale’ of declines in commodity prices in recent months alongside ‘muted’ growth in world prices have led to downward revisions to the inflation outlook.

Kallum Pickering Macro Flash Download:  UK INFLATION REPORT: DOVISH OVERALL BUT CARNEY SAYS ‘NOT ENOUGH TIGHTENING’ IN MARKET EXPECTATIONS
04.02.2016 PRE-INFLATION REPORT: BOE LIKELY TO INDICATE MARKETS ARE TOO DOVISH

Bank of England likely to indicate markets are too dovish on the rate hike outlook: Low inflation, recent weakening of wage growth, growing concerns about the global economy and the Brexit risk will keep the dovish BoE on hold until at least November in our view

Kallum Pickering Macro Flash Download:  PRE-INFLATION REPORT: BOE LIKELY TO INDICATE MARKETS ARE TOO DOVISH
02.02.2016 BREXIT UPDATE: DRAFT EU DEAL PROBABLY ENOUGH FOR CAMERON TO CAMPAIGN TO STAY

Today European Council President Donald Tusk presented a draft settlement for the UK based on the four demands outlined by UK Prime Minister David Cameron. The proposals in Mr Tusk’s letter will be deliberated by all 28 member states at the next European Council meeting 18-19 February.

 

Kallum Pickering Macro Flash Download:  BREXIT UPDATE: DRAFT EU DEAL PROBABLY ENOUGH FOR CAMERON TO CAMPAIGN TO STAY
01.02.2016 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble

  • US: Solid domestic demand, exports drag
  • China: Decelerating growth but no hard landing
  • Japan: Struggling to sustain growth, reforms needed
  • Eurozone: Periphery firm, core suffers near-term dent from export drop
  • UK: Economic recovery continues, 35% Brexit risk
Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
01.02.2016 UK MANUFACTURING ACCELERATES IN JANUARY ON RISING DOMESTIC DEMAND

Domestic demand resilient as global headwinds blow hard on UK manufacturers: The Markit/CIPS UK manufacturing PMI surprised on the upside in January (52.9 versus expectation of 51.6). This is a three month high and the 34th successive month that the index has pointed to expansion in the manufacturing sector.

Kallum Pickering Macro Flash Download:  UK MANUFACTURING ACCELERATES IN JANUARY ON RISING DOMESTIC DEMAND
29.01.2016 ECONOMIC CALENDAR - WEEK OF 1 FEBRUARY
  •  China, PMI manufacturing/Non-manufacturing/Caixin manufacturing (1 February)
  • Eurozone, PMI manufacturing (1 February)
  • US, ISM manufacturing (1 February)
  • Eurozone, Unemployment rate (2 February)
  • US, ISM non-manufacturing composite (3 February)
  •  UK, BoE bank rate (4 February): Dovish minutes
  • US, Change in nonfarm payrolls (5 February): Key Fed data
  • China, Foreign reserves (7 February)
Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 1 FEBRUARY
29.01.2016 EUROZONE: DENT IN SENTIMENT CAN TRIGGER ECB ACTION

Turmoil takes its toll. After a surprise gain in December, economic sentiment in the Eurozone fell noticeably in January to its least-elevated level since the previous round of China-related turmoil had unsettled markets last August. The decline from 106.7 in December to 105.0 in January exceeded expectations. Nonetheless, sentiment remains well above the long-term average of 100 (see chart).

Holger Schmieding, Kallum Pickering Chart of the Week Download:  EUROZONE: DENT IN SENTIMENT CAN TRIGGER ECB ACTION
28.01.2016 UK GDP GROWTH ACCELERATED TO 0.5% IN Q4

Services strength offset weakness in industrial and construction in Q4: GDP growth accelerated to 0.5% qoq in Q4, up from 0.4% in Q3 and in line with estimates. Services growth accelerated to 0.7% qoq, its fastest rate all year and up from 0.6% in Q3. Strong gains in employment, low interest rates and cheap oil supported solid growth in domestic demand in 2015 and the acceleration in services over the course of the year reflects these factors. 

Kallum Pickering Macro Flash Download:  UK GDP GROWTH ACCELERATED TO 0.5% IN Q4
27.01.2016 BREXIT UPDATE: EXIT RISK INCREASES TO 35%

Negative shifts in the opinion polls since last summer should remind us that our biggest risk for the UK in 2016 – voting to “leave” in the EU referendum – needs to be watched carefully. With this, we increase our risk of a Brexit from 30% to 35%. 

Kallum Pickering Global Macro Update Download:  BREXIT UPDATE: EXIT RISK INCREASES TO 35%
25.01.2016 GERMAN IFO: UNCERTAINTY HITS CONFIDENCE

The concerns about some developing countries, the turmoil in financial markets and the refugee crisis are taking their toll on German sentiment.

Holger Schmieding Macro Flash Download:  GERMAN IFO: UNCERTAINTY HITS CONFIDENCE
22.01.2016 SEVEN REASONS WHY WE ARE NOT HEADING FOR RECESSION

Economic upswings don’t die of old age. They end because a cleansing recession is needed after the exuberance of a boom or because an external shock deals a devastating blow to the system. Across the Western world, we find no convincing evidence of serious excesses that would have to be corrected by a downturn soon. More precisely, we find seven reasons why the Western world will probably not fall into a new recession soon.

Holger Schmieding Macro Views Download:  SEVEN REASONS WHY WE ARE NOT HEADING FOR RECESSION
22.01.2016 ECONOMIC CALENDAR - WEEK OF 25 JANUARY

• Fed, FOMC interest rate decision (27 January)
• UK, Q4 GDP (28 January): Downside risk
• Eurozone, Economic confidence (28 January): Turbulence hurts
• France/Spain, Q4 GDP (29 January)
• Eurozone, CPI/CPI core (29 January): Downside risk
• US, Q4 annualised GDP (29 January): Inventory correction

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 25 JANUARY
22.01.2016 UK RETAIL SALES UP IN Q4 DESPITE DECEMBER SLOWDOWN

Retail sales growth slowed sharply in December but remained stable quarter-on-quarter. Even though retail sales increased on an annual basis for the 32nd month in a row in December, they did so at the slowest pace since November 2013. 

Kallum Pickering Macro Flash Download:  UK RETAIL SALES UP IN Q4 DESPITE DECEMBER SLOWDOWN
22.01.2016 EUROZONE PMI: MODEST DENT

Amid mounting concerns about China and escalating turmoil in financial markets, Eurozone purchasing managers became slightly less optimistic in January. The composite PMI for the Eurozone fell more than expected, from 54.3 in December to 53.5 in January. While this is the least positive reading since February 2015, it remains in line with roughly trend growth for the region.

Holger Schmieding Macro Flash Download:  EUROZONE PMI: MODEST DENT
22.01.2016 FALSE INDICATORS OF RECESSION: DON´T BE SO BEARISH

However unpleasant the sharp correction in global stock markets has been for global portfolio managers and policymakers, it has generated excessive bearishness for the global and economic outlook. Some are brashly calling a global recession. That is hard to see, since the dramatic decline in oil prices is an economic positive for net energy importers, including the US, Europe, Japan, China and India that, combined, account for 75% of global economic performance.

Mickey Levy Chart of the Week Download:  FALSE INDICATORS OF RECESSION: DON´T BE SO BEARISH
21.01.2016 ECB: BACK TO THE DRAGHI PUT

In December, the ECB council did not grant Draghi all the easing that he had apparently asked for. In March, Draghi wants to try again. With new downside risks to economic growth and a significant drop in oil prices depressing the near-term outlook for inflation, chances have risen that the council may then agree to an additional stimulus.

Holger Schmieding Macro Flash Download:  ECB: BACK TO THE DRAGHI PUT
20.01.2016 UK UNEMPLOYMENT FALLS FOR FIFTH MONTH IN A ROW

Unemployment at its lowest rate since 2005 but wage growth slows. The unemployment rate has fallen for five months in a row and is now at its lowest level since October 2005. The rate of unemployment was 5.1% in November, beating estimates of unchanged from 5.2% in the previous month. On a 3m/3m basis employment increased by 267k, the fastest rate all year and at 74.0%, employment is currently at its highest level since records began.

Kallum Pickering Macro Flash Download:  UK UNEMPLOYMENT FALLS FOR FIFTH MONTH IN A ROW
19.01.2016 UK CORE INFLATION SURPRISES ON THE UPSIDE

Core inflation beats expectations in December. Headline inflation increased by 0.2% yoy in December, up from 0.1% in November and in line with estimates. Core inflation, which strips out volatile components such as food and energy prices, surprised on the upside - increasing to 1.4%, 0.2ppt above both the consensus and the November figure of 1.2%. 

Kallum Pickering Macro Flash Download:  UK CORE INFLATION SURPRISES ON THE UPSIDE
19.01.2016 POLITICAL RISKS IN EUROPE

To understand Europe, we have to think politics first. In this report, we look at the key political risks ahead in Europe. We assess the impact of the inflow of refugees and of potential terror risks; we discuss the role of Turkey and examine political risks in key European countries including Germany, France and Italy as well as Greece, Finland and Spain. The risks are serious, but probably manageable.

Holger Schmieding Global Macro Update Download:  POLITICAL RISKS IN EUROPE
18.01.2016 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
18.01.2016 CHINA AND OIL: NO NEED TO PANIC

Seven years after the post-Lehman crisis, memories of the disaster are still fairly fresh. Whenever things get wobbly, many scarred market participants are still inclined to sell first and ask questions later. We've seen this in the euro crisis hysteria of 2011-2012 as well as in some other corrections thereafter. As economists, we cannot call the peaks and bottoms of such market swings. But we can assess whether they make sense.

Holger Schmieding Macro Views Download:  CHINA AND OIL: NO NEED TO PANIC
15.01.2016 JUST HOW CHEAP IS OIL?

How cheap is oil? In real terms, oil prices have fallen to a 14-year low of $30 per barrel West Texas Intermediate (WTI). Financial markets are reacting with near-panic. But do we really have to worry about cheap oil? No. The sharp decline in the price of oil since mid-2014 reflects mostly a welcome increase in supply. It is a healthy shot in the arm for almost all major economies. But when markets are nervous, almost everything is bad news.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  JUST HOW CHEAP IS OIL?
15.01.2016 ECONOMIC CALENDAR - WEEK OF 18 JANUARY

• China, GDP Q4 (19 January)
• UK, CPI/CPI core (19 January)
• UK, labour market (20 January)
• ECB, policy decision and press conference (21 January)
• Eurozone/Japan/US, PMI data (22 January)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 18 JANUARY
14.01.2016 GERMANY: ENJOYING ITS GOLDEN DECADE

Germany’s 2015 results:
• 1.5% growth in GDP (even 1.7% if unadjusted for calendar effects)
• near-perfect price stability with just 0.3% inflation
• record employment with another gain of 0.8%
• a fiscal surplus of 0.5% of GDP
• decline in Germany’s public debt ratio to 71.4% of GDP from 74.9% in 2014

Holger Schmieding Macro Flash Download:  GERMANY: ENJOYING ITS GOLDEN DECADE
14.01.2016 MPC MINUTES: OUTLOOK STABLE WITH MORE NEAR-TERM INFLATION WEAKNESS

UK Fundamentals remain robust despite heightened risk perceptions. The key insight from today’s minutes of the Bank of England’s monetary policy committee (MPC) came from the committee’s perspectives on recent events rather than their revolving rhetoric on long-standing issues which rarely change month to month anyway. From a market perspective, a lot has happened in the last month so we were keeping a close eye on how the MPC would react to this.

Kallum Pickering Macro Flash Download:  MPC MINUTES: OUTLOOK STABLE WITH MORE NEAR-TERM INFLATION WEAKNESS
12.01.2016 UK INDUSTRIAL SOFTENS UNEXPECTEDLY IN NOVEMBER

From bad to worse for UK industrial production: Output surprised sharply on the downside in November, falling 0.7% mom compared to growth of 0.1% in October and against expectations of flat growth mom. Output decreased in all of the main sectors. Manufacturing - the largest industrial sector - declined by 0.4% versus expectations of marginal growth of 0.1% mom.

Kallum Pickering Macro Flash Download:  UK INDUSTRIAL SOFTENS UNEXPECTEDLY IN NOVEMBER
12.01.2016 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
08.01.2016 ECONOMIC CALENDAR - WEEK OF 11 JANUARY

• UK, industrial production (12 January)
• Eurozone, industrial production (13 January)
• BoE, MPC meeting, rate decision and minutes (14 January)
• ECB, minutes of December meeting (14 January)
• US, retail sales (15 January)
• US, industrial production (15 January)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 11 JANUARY
08.01.2016 CHINA'S CURRENCY DEVALUATION IS A POSITIVE NECESSARY STEP

The markets’ negative responses to China’s relatively modest currency devaluation have been excessive. Instead, the devaluation is the beginning of a welcomed and favorable currency realignment that will help support China’s now deteriorating export-related manufacturing sector and, along with enhanced monetary and fiscal stimulus, will maintain healthy growth and facilitate China’s desired transition toward a consumption- and services-based economy with less reliance on exports.

Mickey Levy Chart of the Week Download:  CHINA'S CURRENCY DEVALUATION IS A POSITIVE NECESSARY STEP
07.01.2016 CHINA'S CURRENCY DEVALUATION IS ACTUALLY A POSITIVE

Worries about China’s currency devaluation are overstated. In recent years, China’s yuan has appreciated significantly on a trade-weighted basis and its unit labor costs of production have soared, cutting into China’s competitive edge and contributing to declining exports. A modest depreciation of its currency is an appropriate adjustment that is positive for China’s economy and global performance.

Mickey Levy Macro Views Download:  CHINA'S CURRENCY DEVALUATION IS ACTUALLY A POSITIVE
06.01.2016 UK SERVICES ENDED 2015 ON A SOLID FOOTING

PMI points to stable gains in Q4. The on-going period of rising services output completed its third year in December with a figure of 55.5, slightly below the consensus of 55.6 but above the long-run trend of 55.2. On a quarterly basis the index remained stable at 55.4 suggesting that services output is likely to have sustained its Q3 growth rate of 0.6% in the final quarter.

Kallum Pickering Macro Flash Download:  UK SERVICES ENDED 2015 ON A SOLID FOOTING
05.01.2016 GLOBAL OUTLOOK 2016: THE CRITICAL ISSUES

What are the driving factors for the global economy in 2016? How will China’s deceleration and lower commodity prices affect global growth and trade? Will Eurozone economies continue to improve? Can the UK sustain healthy growth?  What are the political risks and how much do we have to worry about a potential British exit from the European Union (Brexit)? How will the US perform relative to the Federal Reserve’s expectations, and how will the US and global economies be influenced by rising US rates? In this report, we discuss the key issues for 2016 in a question and answer format.

Holger Schmieding, Mickey Levy, Kallum Pickering, Carsten Hesse Macro Views Download:  GLOBAL OUTLOOK 2016: THE CRITICAL ISSUES
05.01.2016 UK CONSTRUCTION PMI STILL AT ODDS WITH OFFICIAL DATA

Construction likely declined in Q4, despite rosy PMI data. At 57.8, the survey indicated a rebound in activity from November’s low of 55.3. Although monthly data shows a modest uptick in December and were above consensus (57.8), we treat the data with caution. Since mid-2015 PMI data has suggested much more favourable conditions than official data indicate.

Kallum Pickering Macro Flash Download:  UK CONSTRUCTION PMI STILL AT ODDS WITH OFFICIAL DATA
04.01.2016 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
31.12.2015 ECONOMIC CALENDAR - WEEK OF 04 JANUARY

• US, ISM manufacturing (04 January)
• China/Eurozone/UK, PMI data (04 January)
• Eurozone, CPI/CPI core (05 January)
• Fed releases minutes (06 January)
• Eurozone, confidence data (07 January)
• US, labour market (08 January)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 04 JANUARY
31.12.2015 MIND THE POLITICAL RISKS: A SALUTARY LESSON FROM 2015

The top risks for 2016. The populist backlash against the indignities of globalisation, migration and the inevitable fiscal repair poses a threat to the coherence of Europe, which underpins free exchange and prosperity across Europe.If the UK were to damage investor confidence in its economic future by deciding to leave the biggest single market in the world, it could pay a steep price for a reversion to such isolationism. The 30% Brexit risk is among our top concerns for 2016.

Holger Schmieding Chart of the Week Download:  MIND THE POLITICAL RISKS: A SALUTARY LESSON FROM 2015
24.12.2015 ECONOMIC CALENDAR - WEEK OF 28 DECEMBER

• US, consumer confidence (29 December)
• Eurozone, M1/M3 money supply (30 December)
• Eurozone, Private sector loans (30 December)
• China, PMI non/manufacturing (01 January)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 28 DECEMBER
23.12.2015 Q3 GDP: SANTA DELIVERS THE UK A LUMP OF COAL FOR CHRISTMAS

The UK economy ends the year on a very sour note. Final GDP estimates for Q3 show that the economy expanded by just 0.4% qoq, down from the previous estimate of 0.5%. Revisions were also made to Q2 data, the economy expanded by just 0.5% qoq versus a previous estimate of 0.7%.

Kallum Pickering Macro Flash Download:  Q3 GDP: SANTA DELIVERS THE UK A LUMP OF COAL FOR CHRISTMAS
23.12.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
21.12.2015 SPANISH ELECTION: A MESSY RESULT

Do Spaniards want more reforms – or do they want to reverse some of the reforms that have helped to put the Spanish economy back on track? At the national election on Sunday, Spanish voters gave no clear answer. Instead, uncertainty now reigns supreme in Madrid. Forming a new government will be tricky, finding a coalition that could last a full four-year term could be quite difficult indeed.

Holger Schmieding Macro Flash Download:  SPANISH ELECTION: A MESSY RESULT
18.12.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
18.12.2015 ECONOMIC CALENDAR - WEEK OF 21 DECEMBER

• Spain, general election (20 December)
• Eurozone, consumer confidence (21 December)
• US, final  Q3 GDP (22 December)
• France, final Q3 GDP (23 December)
• UK, final Q3 GDP (23 December)
• Japan, industrial production (27 December)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 21 DECEMBER
18.12.2015 SPANISH ELECTIONS: WHAT IS AT STAKE?

Reforms are paying off. The bitter medicine of fiscal repair and pro-growth strutural reforms is working. After a harsh adjustment crisis until early 2013, Spain is recovering fast with a gain in GDP of at least 3.2% in 2015 and a 3.0% yoy rebound in employment in Q3 2015. As exports are rising fast, Spain can now afford to raise its imports again (see chart). The period of belt-tightening is over, private consumption can expand again.

Holger Schmieding Chart of the Week Download:  SPANISH ELECTIONS: WHAT IS AT STAKE?
17.12.2015 ECB AND FED: A TALE OF TWO CENTRAL BANKS

The Fed has just raised interest rates for the first time in almost 10 years, the ECB eased policy again two weeks ago. Why this divergence, and for how long can it last?

Holger Schmieding Macro Flash Download:  ECB AND FED: A TALE OF TWO CENTRAL BANKS
17.12.2015 UK RETAIL SALES SHOW DOMESTIC DEMAND IN RUDE HEALTH

Christmas shopping is in full swing: November retails sales volumes (excl auto) increased by 1.7% mom and 3.9% yoy, significantly above consensus estimates of 0.5% and 2.2%, respectively. Retail sales volumes including auto fuel increased by 5.0% yoy and 1.7% mom. Today’s data exceeded even our own long-held bullish view on UK retail.

Kallum Pickering Macro Flash Download:  UK RETAIL SALES SHOW DOMESTIC DEMAND IN RUDE HEALTH
17.12.2015 GERMAN IFO SIGNALS STEADY EXPANSION

Steady as she goes as external risks recede a little. This is the major message from German Ifo business climate. After a rise in November, the headline index fell back slightly to 108.7 in December from 109.0 in the month before. While the assessment of current conditions softened from 113.4 to a still buoyant 112.8, forward-looking expectations stayed stable at 104.7 after three gains in a row in the months before.

Holger Schmieding Macro Flash Download:  GERMAN IFO SIGNALS STEADY EXPANSION
16.12.2015 UK UPDATE: UNEMPLOYMENT KEEPS BEATING EXPECTATIONS

Unemployment rate falls for the fourth month in a row. There is a clear theme emerging in the UK unemployment data that the market continues to underestimate the pace of labour demand. The unemployment rate was 5.2% in October, beating estimates of 5.3% but in line with our own view.

Kallum Pickering Macro Flash Download:  UK UPDATE: UNEMPLOYMENT KEEPS BEATING EXPECTATIONS
15.12.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
• US: Solid domestic demand, exports drag
• China: Decelerating growth but no hard landing
• Japan: Struggling to sustain growth, reforms needed
• Eurozone: Periphery firm, core suffers near-term dent from export drop
• UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
15.12.2015 UK UPDATE: INFLATION BACK IN POSITIVE TERRITORY

Is this the beginning of ascent of inflation we have been waiting for? After two months of marginal deflation the headline inflation returned to positive territory in November, increasing by 0.1% yoy in line with estimates.

Kallum Pickering Macro Flash Download:  UK UPDATE: INFLATION BACK IN POSITIVE TERRITORY
14.12.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
14.12.2015 EUROPEAN POLITICAL UPDATE: LE PEN DEFLATED, PODEMOS REBOUNDS

The systemic euro crisis has been over since July 2012, the ECB is working hard to keep the economic upswing close to its trend rate. The major risks we have to watch in Europe are in the political rather than economic sphere. We do not expect the political tail risks to materialise. Our base case is that, in its own bumbling way, Europe will slowly come to grips with the migrant crisis and other challenges which the continent is facing: despite a populist backlash against migration, anti-EU populists will not seize power in any major EU member, Britain will probably stay in the EU and German chancellor Merkel will of course remain in office as a strong pro-European leader.

Holger Schmieding Macro Flash Download:  EUROPEAN POLITICAL UPDATE: LE PEN DEFLATED, PODEMOS REBOUNDS
11.12.2015 ECONOMIC CALENDAR - WEEK OF 14 DECEMBER

• Eurozone, industrial production (14 December): modest pickup
• US/UK, CPI/CPI core (15 December)
• Eurozone, PMI data (16 December)
• UK, labour market (16 December): upside surprise
• Fed FOMC interest rate decision (16 December): first rate hike
• Germany, IFO business climate (17 December)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 14 DECEMBER
11.12.2015 THE US FEDERAL RESERVE: FIRST TIME JITTERS

Next week, the Federal Open Market Committee (FOMC) will meet and with virtual certainty it will raise its target Fed funds rate by 25bp to 0.25-0.50%. This will be the Fed’s first rate increase since June 2006. Only three of the current 15 FOMC members have ever been FOMC members when the Fed has raised rates: Janet Yellen, Eric Rosengren and Jeffrey Lacker. Has this added to the Fed’s unwarranted fears of hiking rates?

Mickey Levy Chart of the Week Download:  THE US FEDERAL RESERVE: FIRST TIME JITTERS
11.12.2015 UK UPDATE: INFLATION EXPECTATIONS REMAIN WELL ANCHORED

Low inflation is not leading to weaker inflation expectations. Data from Bank of England/GfK indicate that inflation expectations 12 months ahead remain well anchored at 2.0%. This shows that the public believes that the BoE is capable of reaching its mandate and hence the risk of protracted lowflation is not yet a serious one.

Kallum Pickering Macro Flash Download:  UK UPDATE: INFLATION EXPECTATIONS REMAIN WELL ANCHORED
10.12.2015 UK UPDATE: BOE TUSSLE WITH LABOUR MARKET DEVELOPMENTS

Another dovish set of minutes from the Bank of England (BoE) has dashed any likelihood of a February hike. In line with this assessment, yesterday we shifted our call to May 2016 for the first hike of 25bp. The MPC voted 8-1 in favour of holding the rate at 0.5% and unanimously in favour of maintaining the stock of QE at £375bn.

Kallum Pickering Macro Flash Download:  UK UPDATE: BOE TUSSLE WITH LABOUR MARKET DEVELOPMENTS
10.12.2015 UK UPDATE: OCTOBER SEES SHARP RISE IN GOODS IMPORTS

October trade deficit widens sharply as goods imports jump. The trade deficit widened to its second worst level of the year in October (versus July £4.5bn) with a deficit in goods and services of £4.1bn. This was a large increase against the previous month (£1.1bn) and significantly above consensus estimates (£1.8bn).

 

Kallum Pickering Macro Flash Download:  UK UPDATE: OCTOBER SEES SHARP RISE IN GOODS IMPORTS
09.12.2015 FED HIKE WILL RAISE QUESTIONS FOR DOVISH BOE

Citing robust GDP growth, full employment and rising inflation in 2016, the Fed will probably hike rates next week for the first time since cutting them to almost zero six years ago. For the BoE, the first hike remains a distant prospect. This is odd since UK GDP, labour market and inflation data are starkly similar to the US and indeed both Mark Carney and Janet Yellen have long stated that the timing and pace of rate hikes will be data dependent. We argue that the BoE should be hiking soon too

Kallum Pickering Macro Views Download:  FED HIKE WILL RAISE QUESTIONS FOR DOVISH BOE
08.12.2015 UK UPDATE: MANUFACTURING STRUGGLES TO ESCAPE ROUT

The manufacturing drag is not over. UK industrial output continued to make modest progress in October, adding 0.1% to output on a monthly basis, in line with estimates. On an annual basis, output increased by 1.7%, an acceleration from the 1.2% yoy growth in Q3. Overall, this bodes well for GDP going into the final quarter.

Kallum Pickering Macro Flash Download:  UK UPDATE: MANUFACTURING STRUGGLES TO ESCAPE ROUT
04.12.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit ris

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
04.12.2015 ECONOMIC CALENDAR - WEEK OF 07 DECEMBER

• Germany, industrial production (07 December)
• China, CPI (09 December): modest pickup
• Germany, Trade balance (09 December)
• BoE, policy decision (10 December): 7-2 vote
• US, retail sales (11 December)
• China, industrial production/retail sales (12 December)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 07 DECEMBER
04.12.2015 ECB: MORE LIKE THE FED AFTER ALL?

ECB versus Fed. The two biggest central banks in the world are going their very separate ways. The European Central Bank scaled up its monetary stimulus modestly on Thursday, while the US Federal Reserve looks set to raise interest rates on 16 December. The solid US employment report should have dispelled any lingering doubt.

Holger Schmieding Chart of the Week Download:  ECB: MORE LIKE THE FED AFTER ALL?
03.12.2015 ECB: ONE FINAL STIMULUS

Reacting to ultra-low inflation, the prospect that headline inflation will not get close to the ECB’s “close to but below 2% target” before 2018 and the recent emerging-market hit to the Eurozone’s export oriented industrial sector, the European Central Bank is scaling up its monetary stimulus. But it is doing so by less than expected.

Holger Schmieding Macro Flash Download:  ECB: ONE FINAL STIMULUS
03.12.2015 UK UPDATE: SERVICES PMI HERALDS SOLID GROWTH IN Q4

UK economy on target for 2.4% growth in 2015: In November, PMI data for UK services (which makes up 80% of GDP) improved for the second month in a row. The index rose to 55.9 from 54.9 in October, beating consensus estimates of 55.0 but broadly in line with our forecast of 56.0. Overall, this bodes well for GDP in the fourth quarter

Kallum Pickering Macro Flash Download:  UK UPDATE: SERVICES PMI HERALDS SOLID GROWTH IN Q4
02.12.2015 ECB PREVIEW: ONE LAST STIMULUS

The case for a further monetary stimulus is less clear-cut than it was ahead of previous big ECB decisions. The discussion in Frankfurt will likely be more contentious than in the past. But that is par for the course. The very low level of inflation, the prospect that headline inflation will not get close to the ECB’s “close to but below 2% target” before 2018 and the recent emerging-market hit to the Eurozone’s export oriented industrial sector gives the ECB the opportunity to scale up it stimulus tomorrow.

Holger Schmieding Macro Flash Download:  ECB PREVIEW: ONE LAST STIMULUS
01.12.2015 UK UPDATE: PMI HIDES TOUGH CONDITIONS FOR UK MANUFACTURING

Long-term winds blowing against UK manufacturing are likely to stall any meaningful growth. PMI data from Markit/CIPS points to another month of growth with the headline index at 52.7, below consensus of 53.6 and the previous month 55.2.

Kallum Pickering Macro Flash Download:  UK UPDATE: PMI HIDES TOUGH CONDITIONS FOR UK MANUFACTURING
01.12.2015 UK UPDATE: FINANCIAL STABILTY REPORT

Risks have shifted since the last report but the UK financial system can maintain core functions in the event of a large negative shock. Countercyclical capital buffer held at zero but will gradually rise to 1%.

Kallum Pickering Macro Flash Download:  UK UPDATE: FINANCIAL STABILTY REPORT
30.11.2015 UK UPDATE: MACRO PRUDENTIAL TOOLS AT THE READY

BoE at risk of sending the wrong message: Is the BoE worried about raising interest rates? If so, the manifestation of this sentiment could have more serious long-term implications than the short-term adjustment risk that could occur when rates finally get off the ground. It contradicts the BoE’s stated interim objective of getting back to a situation where the interest rate is the primary policy tool.

Kallum Pickering Macro Flash Download:  UK UPDATE: MACRO PRUDENTIAL TOOLS AT THE READY
30.11.2015 EUROPEAN POLITICAL UPDATE: MIGRATION DEAL WITH TURKEY; SPANISH POLLS; PORTUGUESE NOISE

The migrant crisis poses a more serious risk to the cohesion of Europe than the euro crisis ever did. But we do not expect these tail risks to materialise. Our base case is that, in its own bumbling way, Europe will slowly come to grips with the migrant crisis and other challenges which the continent is facing: despite a populist backlash against migration, anti-EU populists will not seize power in any major EU member, Britain will stay in the EU and German chancellor Merkel will stay in office as a strong pro-European leader.

Holger Schmieding Macro Flash Download:  EUROPEAN POLITICAL UPDATE: MIGRATION DEAL WITH TURKEY; SPANISH POLLS; PORTUGUESE NOISE
27.11.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
27.11.2015 ECONOMIC CALENDAR - WEEK OF 30 NOVEMBER

• China, PMI non/manufacturing (01 December)
• US, ISM manufacturing (01 December)
• Eurozone, unemployment rate (01 December): improving trend
• Eurozone, CPI/CPI core (02 December)
• ECB policy decisions (03 December): ECB stimulus ahead
• US, labour market (04 December): key Fed data

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 30 NOVEMBER
27.11.2015 UK INFLATION OUTLOOK WARRANTS EARLY BOE HIKE

Waiting too long to hike could make “gradual tightening” challenging if inflation overshoots. The risks to the economy and inflation of beginning the rate hike cycle sooner rather than later are low. Given the need for a gradual pace of tightening, an early start will be necessary to negate the risk that underlying price pressures accumulate more rapidly than desired. This scenario might require more aggressive hikes to control and would risk destabilising the economy.

Kallum Pickering Macro Views Download:  UK INFLATION OUTLOOK WARRANTS EARLY BOE HIKE
27.11.2015 EUROZONE: CREATING MORE JOBS

The tide has turned. Helped by a monetary policy that finally became suitably aggressive, reform progress at the periphery and the end of the post-Lehman fiscal repair, the Eurozone started to create jobs again in mid-2013. The pace of jobs growth with 0.8% yoy gains in late 2014 and H1 2015 remains mediocre – but it was enough to push unemployment down from a peak of 12.1% in spring of 2013 to 10.8% in September 2015.

Holger Schmieding Chart of the Week Download:  EUROZONE: CREATING MORE JOBS
27.11.2015 UK Q3 GDP: STRONG IMPORTS OFFSET BROAD BASED GROWTH

Strong demand is both a gift and curse for the UK economy. The UK economy grew by 0.5% qoq and 2.3% yoy in the third quarter, in line with estimates. Taking the Q3 growth rate at face value against the 0.7% qoq pace in Q2 hides more than it reveals.

Kallum Pickering Macro Flash Download:  UK Q3 GDP: STRONG IMPORTS OFFSET BROAD BASED GROWTH
26.11.2015 ECB: THE POWER OF MONEY

Have money, will spend. The ECB’s monetary stimulus underpins resilient domestic demand in the Eurozone. Ever since the ECB started to shift to a suitably aggressive stance in June 2014, money and credit dynamics have strengthened significantly in the Eurozone. Growth in M1 money supply advanced further to 11.8% yoy in October from 11.7% in September. This is the fastest pace since January 2010.

Holger Schmieding Macro Flash Download:  ECB: THE POWER OF MONEY
25.11.2015 UK UPDATE: OSBORNE UNLIKELY TO HIT DEFICIT TARGETS

Planned cuts will not come. George Osborne has set a precedent in the last five years that he won’t break over the next five years. He makes promises for cuts that he never quite gets around. This is good news for the economy today, but a risk for tomorrow

Kallum Pickering Macro Flash Download:  UK UPDATE: OSBORNE UNLIKELY TO HIT DEFICIT TARGETS
23.11.2015 EUROPE: OUR BASE CASE

After a near-term dent, we expect Eurozone growth to gradually rebound to an annualised pace around 1.7% over the course of next year as the impact of the emerging market crisis fades. A fiscal stimulus across much of the Eurozone of roughly 0.3% of GDP, including extra spending on refugees of at least 0.6% of German GDP in Germany, will support domestic demand.

Holger Schmieding Macro Views Download:  EUROPE: OUR BASE CASE
20.11.2015 UK CONSUMERS: SPENDING THE WINDFALL FROM CHEAP OIL

There’s a difference between good lowflation and bad lowflation. Cheaper oil and food is the first type. In October the combined effect of falling oil and food prices reduced headline inflation by 0.7ppts. Absent of these effects, inflation would have been around 1.3% yoy

Holger Schmieding, Kallum Pickering Chart of the Week Download:  UK CONSUMERS: SPENDING THE WINDFALL FROM CHEAP OIL
20.11.2015 ECONOMIC CALENDAR - WEEK OF 23 NOVEMBER

• Eurozone, PMI data (23 November)
• Germany, IFO business climate (24 November)
• US, Q3 GDP second (24 November): Upward revision?
• Eurozone, Money supply/private sector loans (26 November): Strong growth
• Eurozone, Confidence and climate data (27 November)
• UK, Q3 GDP second (27 November)

Holger Schmieding UK Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 23 NOVEMBER
20.11.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
19.11.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
19.11.2015 UK UPDATE: SOLID TREND IN RETAIL SALES DESPITE MONTHLY BLIP

On an annual basis retail sales have increased for 30 months in a row. The stronger than expected dip in the monthly data does not take away from a solid trend which has persisted for almost two years. Going forward, we expect a strong pace of growth to continue into the medium-term.

Kallum Pickering Macro Flash Download:  UK UPDATE: SOLID TREND IN RETAIL SALES DESPITE MONTHLY BLIP
17.11.2015 UK UPDATE: UPTICK IN CORE INFLATION BUT HEADLINE HOLDS AT -0.1%

Low-inflation continues to boost the UK economy. For the second month in a row, and for the third time this year, UK prices fell. Headline CPI declined 0.1% yoy, in line with estimates and unchanged from the previous month. Core prices grew by 1.1% yoy, the fastest rate for three months, beating estimates of 1.0% growth yoy.

Kallum Pickering Macro Flash Download:  UK UPDATE: UPTICK IN CORE INFLATION BUT HEADLINE HOLDS AT -0.1%
16.11.2015 FORECASTS AT A GLANCE: SUSTAINED GROWTH

Outlook: Developed world largely resilient, emerging markets hit trouble
• US: Solid domestic demand, exports drag
• China: Decelerating growth but no hard landing
• Japan: Struggling to sustain growth, reforms needed
• Eurozone: Periphery firm, core suffers near-term dent from export drop
• UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Global Macro Update Download:  FORECASTS AT A GLANCE: SUSTAINED GROWTH
16.11.2015 AFTER PARIS: NOTES ON THE ECONOMIC IMPACT

The long-term economic impact is difficult to judge. A lot will depend how forceful the West now reacts to the challenge. Near-term, we do not expect any significant break to the established economic trends in Europe, that is to a mediocre economic upswing led mostly by private consumption. We look for Eurozone growth to return to its 1.7% trend over the course of 2016 after a dip in 2H 2015 caused by declining exports to some major emerging markets.

Holger Schmieding Macro Flash Download:  AFTER PARIS: NOTES ON THE ECONOMIC IMPACT
13.11.2015 ECONOMIC CALENDAR - WEEK OF 16 NOVEMBER

• Eurozone, CPI/CPI core (16 November): supports ECB easing
• Eurozone, ZEW expectations (17 November)
• Germany, ZEW expectations/current situation (17 November): modest rebound
• US/UK, CPI/CPI core (17 November)
• US, industrial production (17 November)
• UK, retail sales (19 November): solid trend
• Eurozone, consumer confidence (20 November): still high, small drop

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 16 NOVEMBER
13.11.2015 EUROZONE: TWO CHEERS FOR THE PERIPHERY

Periphery outperforms the core. Taking the last two quarters together, the periphery has contributed slightly more
than half to overall Eurozone growth although the region accounts for just 35% of total GDP. This is great
news for Europe. The pain at the periphery was not in vain.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  EUROZONE: TWO CHEERS FOR THE PERIPHERY
13.11.2015 EUROZONE: MODEST SLOWDOWN

As in the US and the UK, growth lost some momentum in the Eurozone over the summer. The recession in some major emerging markets and the slowdown in China are taking their toll on export-oriented manufacturing. However, supported by a gradually firming labour market and the boost to real incomes from low oil prices, private consumption is holding up. We expect more of the same for Q4, followed by a gradual return to the trend rate of 1.7% over the course of 2016 as concerns about emerging markets fade.

Holger Schmieding Macro Flash Download:  EUROZONE: MODEST SLOWDOWN
13.11.2015 UK UPDATE: CONSTRUCTION CONTINUES TO SLIDE

2.2% qoq decline eliminates chance of an upward revision to Q3 GDP: Official construction data continue to mystify. According to PMI and survey evidence, construction is the strongest performing UK industry, and yet official data show it as the worst performing. Even export-oriented manufacturing, which has proved vulnerable to slowing global trade, only fell by 0.4% qoq in Q3.

Kallum Pickering Macro Flash Download:  UK UPDATE: CONSTRUCTION CONTINUES TO SLIDE
13.11.2015 GERMAN GDP: STRONG AT HOME, MODEST HIT FROM ABROAD

The strength in German domestic demand does not suffice to fully offset the hit from emerging markets. After a gain of 0.44% qoq in Q2, German growth slowed down to 0.32% qoq in Q3, roughly in line with expectations. We expect more of the same for the last quarter of the year before growth could rebound back to its trend rate of around 0.45% qoq (1.8% yoy) over the course of next year. In yoy terms, German growth in Q3 still came in at 1.7% and thus close to the trend rate.

Holger Schmieding Macro Flash Download:  GERMAN GDP: STRONG AT HOME, MODEST HIT FROM ABROAD
12.11.2015 EURO UPDATE: ECB, PORTUGAL, GREECE, SPAIN

Draghi drops a heavy hint
The ECB will likely scale up its stimulus in December. In his testimony to an EU parliamentary committee, Draghi warned that downside economic risks are “clearly visible” and that inflation dynamics have “some-what weakened”. He emphasised that the ECB will re-examine its degree of stimulus at its 3 December meeting and would act if need be. Asset purchases could be extended beyond September 2016 if necessary to achieve the medium-term inflation target.

Holger Schmieding Eurozone Update Download:  EURO UPDATE: ECB, PORTUGAL, GREECE, SPAIN
11.11.2015 UK UPDATE: LABOUR MARKET CONTINUES TO BEAT EXPECTATIONS

Labour market points to building domestic pressure. Latest unemployment data unambiguously demonstrate the labour market has recovered, proving the UK economy is not just doing ok anymore, but is in good shape – it’s time to start thinking about rate hikes.

Kallum Pickering Macro Flash Download:  UK UPDATE: LABOUR MARKET CONTINUES TO BEAT EXPECTATIONS
10.11.2015 EU PROPOSALS: CAMERON HAS A REASONABLE CHANCE OF SUCCESS

Cameron’s EU reform proposals look mostly constructive. While they are somewhat contentious, they are a reasonable basis for discussions with the EU about the terms of continued UK membership in the EU. They can help to quell British apprehension towards EU.

Kallum Pickering Macro Flash Download:  EU PROPOSALS: CAMERON HAS A REASONABLE CHANCE OF SUCCESS
10.11.2015 FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN

US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN
06.11.2015 THE IMPACT OF MIGRATION

People on the move: Migration has turned into the top issue in Europe. The policy response is still evolving. This includes attempts to sharply slow down the inflow of refugees as well as the discussion about how to integrate those who will be allowed to stay. As a result, the numbers below merely illuminate the issues at stake and give a sense of potential magnitudes.

Holger Schmieding Chart of the Week Download:  THE IMPACT OF MIGRATION
06.11.2015 UK UPDATE: TRADE AND MANUFACTURING DRAG ON Q3 GROWTH

Despite the risks from abroad production edged up in Q3. Output increased in the industrial sector by 0.2% qoq. Export oriented manufacturing, the largest component of the sector, declined by 0.4% over the same period. The largest contribution to growth came from mining and quarrying which grew by 2.8%.

Kallum Pickering Macro Flash Download:  UK UPDATE: TRADE AND MANUFACTURING DRAG ON Q3 GROWTH
05.11.2015 UK UPDATE: MPC MORE DOVISH THAN EXPECTED

Still more doves than hawks on the MPC: We will have to wait until the press conference for Governor Carney to add some colour to the minutes and inflation report but the unchanged vote split of 8-1 in favour of keeping rates on hold, in addition to downward revisions to inflation and growth indicate that the MPC are still cautious on the outlook.

Kallum Pickering Macro Flash Download:  UK UPDATE: MPC MORE DOVISH THAN EXPECTED
05.11.2015 UK UPDATE: MIXED SIGNALS FROM THE BOE

Monetary Policy Committee (MPC) thinks markets are too dovish: The Bank of England (BoE) sees the interest rate path that is implied by market indicators as too dovish. The statement said that “the lower path for the Bank Rate implied by market yields would provide more than adequate support to domestic demand”. Adding, “the MPC’s best collective judgement is for the most likely path for inflation to exceed slightly the 2% target in two years and then rise a little further above it, reflecting modest excess demand”.

Kallum Pickering Macro Flash Download:  UK UPDATE: MIXED SIGNALS FROM THE BOE
05.11.2015 EUROZONE LARGELY ON TRACK DESPITE SOFT GERMAN ORDERS

Despite a 2.8% qoq drop in German industrial orders in Q3, the Eurozone economy looks set to weather the recent external shocks fairly well. So far, we find no strong evidence that the controlled slowdown in China, the recession in some other emerging markets and the Dieselgate scandal are hurting demand beyond the export oriented sectors directly affected. Instead, most broad-based leading and co-incident sentiment indicators have either strengthened or moved sideways at a high level in the last few months.

Holger Schmieding Macro Flash Download:  EUROZONE LARGELY ON TRACK DESPITE SOFT GERMAN ORDERS
03.11.2015 UK UPDATE: BOE PREVIEW – PREPARING FOR A HIKE

On Thursday, the Bank of England (BoE) will publish its fourth and final inflation report of the year alongside its rate decision and MPC minutes. Markets have changed their tune in the last month about the likely timing of the rate hike in the run-up to this report. As we have said for some time, markets have been too dovish on UK monetary policy in recent months.

Kallum Pickering Macro Flash Download:  UK UPDATE: BOE PREVIEW – PREPARING FOR A HIKE
02.11.2015 EUROZONE ECONOMY: HOLDING UP WELL SO FAR

We expect 1.6% growth for 2016, rising to 1.8% in 2017, after 1.5% this year. Near-term, we still project a temporary slowdown in growth for late 2015 led by export-oriented industry. But as the survey data have, on balance, turned up rather than down over the last two months, we are delighted to acknowledge that there may be at least as much upside than downside risk to our calls for late 2015 and the start of 2016

Holger Schmieding Macro Views Download:  EUROZONE ECONOMY: HOLDING UP WELL SO FAR
02.11.2015 UK UPDATE: SIGNS OF POTENTIAL UPTURN AHEAD FOR MANUFACTURING

Purchasing managers index points to strongest growth since June 2014. Having been dogged in the past year by weaker global trade conditions, and more recently by the slowdown in China and emerging market rout, there are tentative signs that UK manufacturing might find a steadier footing in the final quarter of 2015.

Kallum Pickering Macro Flash Download:  UK UPDATE: SIGNS OF POTENTIAL UPTURN AHEAD FOR MANUFACTURING
02.11.2015 EUROPEAN POLITICS: HOW SERIOUS ARE THE RISKS?

The migrant crisis poses a more serious risk to the cohesion of Europe than the euro crisis ever did. The European Union and the euro are political projects based on the political will of their members to stay together. European integration has underpinned the longest period of peace and prosperity that most of Europe has known for centuries. As a result, the political will to continue the institutionalised cooperation between countries that is the nature of the EU is quite strong on the continent.

Holger Schmieding Macro Flash Download:  EUROPEAN POLITICS: HOW SERIOUS ARE THE RISKS?
30.10.2015 THE HEALTHY US CONSUMER - SOLID GDP CONTRIBUTOR

Real consumption in the US continues to grow at a healthy pace, driven by solid increases in incomes, improved household balance sheets and near-record household net worth. As we approach the holiday retail season, the spending outlook is favourable.

Mickey Levy Chart of the Week Download:  THE HEALTHY US CONSUMER - SOLID GDP CONTRIBUTOR
30.10.2015 UK UPDATE: THE FED EFFECT - FOMC MOVES GILTS MORE THAN MPC

No matter what officials at the BoE say, markets are clearly looking at the Fed first, BoE second when making bets on the first rate hike in the UK.

Kallum Pickering Macro Flash Download:  UK UPDATE: THE FED EFFECT - FOMC MOVES GILTS MORE THAN MPC
30.10.2015 ECONOMIC CALENDAR - WEEK OF 02 NOVEMBER

• US, ISM manufacturing (02 November)
• EZ/UK, PMI manufacturing (02 November)
• EZ/UK, PMI services (04 November)
• UK, BoE bank rate (05 November)
• GE, Industrial production (06 November)
• US, Change in non-farm prayrolls and unemployment rate (06 November)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 02 NOVEMBER
27.10.2015 UK UPDATE: Q3 GDP – ECONOMY HELD BACK BY LAGGARD SECTORS

Services accelerate in Q3 but falling construction and industrial softness caps UK growth. The UK economy grew by 0.5% qoq in Q3, a little below estimates of 0.6%. Is it time to worry? No, not yet anyway.

Kallum Pickering Macro Flash Download:  UK UPDATE: Q3 GDP – ECONOMY HELD BACK BY LAGGARD SECTORS
23.10.2015 UK RETAIL SALES: STRENGTH IN NUMBERS

A nation of consumers: The old adage is true; the UK really is a nation of consumers. Even in the post-Lehman world this proverbial truth has held. The labour market has recovered much faster than expected and employment is now at a record high. Our chart shows that Britons have found a job, and then a shop.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  UK RETAIL SALES: STRENGTH IN NUMBERS
23.10.2015 ECONOMIC CALENDAR - WEEK OF 26 OCTOBER

• Germany, IFO (26 October)
• EZ, money supply M1, M3 (27 October)
• UK, GDP Q3 (27 October)
• Fed, FOMC interest rate decision (28 October)
• EZ, confidence (29 October)
• US, GDP Q3 (30 October)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 26 OCTOBER
23.10.2015 FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN

We add 2017 forecasts: Global upturn continues, emerging markets recover, inflation creeps up modestly, central banks reduce stimulus slowly
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN
22.10.2015 UK UPDATE: RETAIL SALES POINT TO DOMESTIC STRENGTH IN Q3

September retail sales grow at the fastest pace in 21 months. Growth in retail sales ex autos increased sharply in September following one of the rainiest Augusts on record. Retail sales grew by 1.7% mom, beating consensus estimates of 0.4% and even beating our own bullish view of 0.6% mom – although previous data had been revised down somewhat.

Kallum Pickering Macro Flash Download:  UK UPDATE: RETAIL SALES POINT TO DOMESTIC STRENGTH IN Q3
21.10.2015 UK UPDATE: FISCAL BUDGET CONTINUES TO IMPROVE

Drop in government borrowing boosts September data. Public sector net borrowing excluding (PSNB ex) banks fell by more than expected in September, beating consensus (£10.1bn) at £9.4bn. Compared to a year earlier, borrowing declined by 14.3%, or £1.6bn. Central government net borrowing fell by £1.2bn, contributing the most to the decline.

Kallum Pickering Macro Flash Download:  UK UPDATE: FISCAL BUDGET CONTINUES TO IMPROVE
16.10.2015 ECONOMIC CALENDAR - WEEK OF 19 OCTOBER

• China GDP (19 October): slowdown, no crash
• Eurozone consumer confidence (22 October): small dent, still high
• ECB policy decisions (22 October): hint at December ease?
• Eurozone PMIs (23 October): almost stable
• German PMIs (23 October): PMI manufacturing takes a hit

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 19 OCTOBER
16.10.2015 FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN

We add 2017 forecasts: Global upturn continues, emerging markets recover, inflation creeps up modestly, central banks reduce stimulus slowly
US: Solid domestic demand, exports drag
China: Decelerating growth but no hard landing
Japan: Struggling to sustain growth, reforms needed
Eurozone: Periphery firm, core suffers near-term dent from export drop
UK: Economic recovery continues, 30% Brexit risk

Holger Schmieding, Mickey Levy, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: OUTLOOK 2017: SUSTAINED GROWTH AGAIN
16.10.2015 MIGRATION IMPACT: MERKEL'S STAR WANING?

A threat to the cohesion of Europe: A populist backlash against immigration is potentially a far more serious threat to the cohesion of Europe and hence to its economic and political future than the much-hyped euro crisis ever was. Across Europe, the right-wing populists who rail most strongly against immigration are usually strongly anti-European as well.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  MIGRATION IMPACT: MERKEL'S STAR WANING?
14.10.2015 UK UPDATE: EMPLOYMENT RATE HIGHEST ON RECORD

UK labour market makes further progress in August despite headwinds. The unemployment rate for August fell to 5.4%, beating estimates and at its lowest rate since May 2008. It was down 0.1pp compared to July and down 0.6pp from a year earlier. At 73.6%, UK employment is now at its highest level on record.

Kallum Pickering Macro Flash Download:  UK UPDATE: EMPLOYMENT RATE HIGHEST ON RECORD
13.10.2015 UK UPDATE: FROM OIL TO PRODUCER PRICES TO INFLATION

Headline inflation dominated by fall in oil price despite sterling effect easing. The headline measure for consumer prices dipped its toe back into the cold deflationary water in September, declining very slightly (-0.1%) on an annual basis, following a rate of zero in August.

Kallum Pickering Macro Flash Download:  UK UPDATE: FROM OIL TO PRODUCER PRICES TO INFLATION
09.10.2015 ECONOMIC CALENDAR - WEEK OF 12 OCTOBER

• German ZEW survey expectations and current situation (13 October): significant drop in expectations
• US Retail sales (14 October): modest gain
• UK ILO unemployment rate (14 October): upside risk

Kallum Pickering Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 12 OCTOBER
09.10.2015 GERMANY: RESILIENT HOME BASE, SOFTER EXPORTS

Strength close to home: Our chart shows that demand close to home remains resilient. The inflow of orders from Germany itself (44.8% of the total) is stable while orders from other Eurozone members (22.7%) continue to rise. In addition, firming of demand across the euro periphery from a combination of reforms and ECB support is boosting Germany’s trade links with its immediate neighbours.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  GERMANY: RESILIENT HOME BASE, SOFTER EXPORTS
09.10.2015 CARNEY SAYS BOE AREN’T LED BY FED

We expect the first rate rise of 25 bps to come in February 2016. This view is driven by our expectations of the evolution of the economy until February and our forecasts thereafter. Should the on-going international threats intensify such that the UK outlook deteriorates this would likely prompt a re-think

Kallum Pickering Macro Flash Download:  CARNEY SAYS BOE AREN’T LED BY FED
08.10.2015 EUROZONE OUTLOOK: BEYOND THE CHINA DIP

Is the best over already? After expanding at an annualised pace of 1.8% in the first half of 2015, we expect the Eurozone to slow down to a rate of 1.2% in late 2015 before accelerating back to its trend rate of roughly 1.7% over the course of next year. A sharp fall in exports to some vulnerable emerging markets such as Brazil and stalling exports to China are taking a toll on export-oriented industries. However, the firmer trend in domestic demand will cushion the blow.

Holger Schmieding Macro News Download:  EUROZONE OUTLOOK: BEYOND THE CHINA DIP
08.10.2015 BOE MINUTES: IGNORE THE VOTE AND LOOK AT THE MINUTES

The Bank of England agrees – Q3 will not be a disaster. As we have repeatedly stated and as the Bank of England correctly reiterates the on-going risks from the EM crisis and a slowing China are ones that the UK economy can weather providing domestic fundamentals remain intact

Kallum Pickering Macro Flash Download:  BOE MINUTES: IGNORE THE VOTE AND LOOK AT THE MINUTES
07.10.2015 UK UPDATE: INDUSTRIAL RECOVERS SUMMER DECLINE

Even the UK’s weakest sector has a few tricks up its sleeve. Amidst global turmoil, UK industrial posted its strongest monthly gain in three years. Output increased by 1.0% mom against consensus estimates of a +0.3% and above our own bullish view of +0.6%.

Kallum Pickering Macro Flash Download:  UK UPDATE: INDUSTRIAL RECOVERS SUMMER DECLINE
05.10.2015 FORECASTS AT A GLANCE: Cruising speed despite serious EM risk

Global: Developed world mostly resilient, emerging markets hit trouble.
US: Solid fundamentals, strong dollar hurts a little.
China: Serious wobbles but no hard landing.
Japan: Mediocre cyclical upturn, future hinges on reforms.
Eurozone: Periphery firming, core stable despite external risks.
UK: Recovery continues, Brexit risk not virulent yet.

Holger Schmieding, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: Cruising speed despite serious EM risk
02.10.2015 ECONOMIC CALENDAR - WEEK OF 05 OCTOBER

• Portuguese parliamentary elections (04 October)
• G-20 finance ministers and central bank governors meeting in Lima (08 October)
• BoE monetary policy committee meeting and rate decision (08 October)
• ECB minutes of previous meeting to be released (08 October)
• Fed publishes FOMC meeting minutes (08 October)

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 05 OCTOBER
02.10.2015 EUROZONE CAN WEATHER EXTERNAL SHOCKS, AS IN 1990s

Bad news often comes in droves: Concerns about China, crises in Brazil and some other key emerging markets, and now even the Volkswagen “Dieselgate” scandal: can the Eurozone recovery stay on track despite these external shocks? Yes it can, probably with no more than a modest dent in growth in the next two quarters.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  EUROZONE CAN WEATHER EXTERNAL SHOCKS, AS IN 1990s
01.10.2015 UK UPDATE: MANUFACTURING BELOW EUROZONE AVERAGE

Conditions deteriorate for UK manufacturing as it slips below the Eurozone average. Markit/CIPS UK manu-facturing PMI fell for the third month in a row. At 51.5 the UK was below the Eurozone average of 52.0. The UK was above France (50.6) which continues to lag behind but below Italy (52.7) and Germany (52.3). The UK’s Q3 average declined compared with Q2, which was also lower that the Q1 average

Kallum Pickering Macro Flash Download:  UK UPDATE: MANUFACTURING BELOW EUROZONE AVERAGE
30.09.2015 UK UPDATE: Q2 GDP - HALF WAY THERE TO A STERLING YEAR

The UK economy grew at an annual rate of 2.9% in the first half of 2015. Office for National Statistics (ONS) data confirm a strong first leg of 2015, driven by solid domestic demand. The economy grew by 0.7% qoq, with all three key sectors improving on a quarterly basis.

Kallum Pickering Macro Flash Download:  UK UPDATE: Q2 GDP - HALF WAY THERE TO A STERLING YEAR
29.09.2015 EUROZONE CONFIDENCE: WEATHERING RISKS

Eurozone sentiment shows strong surprise on the upside against a backdrop of heightened risk. A highly accommodative stance from the ECB – with hints of more to come, a tailwind from cheap oil and despite recent gains, a competitive Euro are underpinning continued economic growth and in turn healthy gains in sentiment.

Kallum Pickering Macro Flash Download:  EUROZONE CONFIDENCE: WEATHERING RISKS
25.09.2015 ECONOMIC CALENDAR - WEEK OF 28 SEPTEMBER

• Catalan regional elections (27 September): no convincing vote for independence
• Eurozone unemployment rate (30 September): slow improvement
• Eurozone CPI estimate and core (30 September): cheap oil
• US change in non-farm payrolls (02 October): solid trend
• US average hourly earnings (02 October): slow increase

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 28 SEPTEMBER
25.09.2015 CATALONIA: NOT ALL DREAMS CAN COME TRUE

What is in a vote? If opinion polls are any guide, political groups that staunchly support independence from Spain will get about 50% of the votes in Catalonia’s regional election this Sunday. If luck is on their side, they will have a majority of seats in the regional assembly. What does this mean? Probably not much.

Holger Schmieding Chart of the Week Download:  CATALONIA: NOT ALL DREAMS CAN COME TRUE
24.09.2015 GERMANY: RESILIENT ENOUGH TO COPE

"Germany is an export driven economy that thrives on selling its wares abroad but just can't get its own domestic demand going". This widespread view was never quite right. Meanwhile, it is simply wrong. Instead, the strength of domestic consumption is helping Germany to cope with some nasty external shocks.

Holger Schmieding Macro Flash Download:  GERMANY: RESILIENT ENOUGH TO COPE
21.09.2015 GREEK ELECTION WRAP-UP: A SECOND CHANCE FOR TSIPRAS

• A clearer victory than expected for Tsipras, with Syriza some 7 points ahead of ND.
• Syriza likely to continue its coalition with small right-wing Anel.
• Syriza’s left-wing rebels fail to clear 3% threshold.

Holger Schmieding Macro Flash Download:  GREEK ELECTION WRAP-UP:  A SECOND CHANCE FOR TSIPRAS
18.09.2015 FORECASTS AT A GLANCE: Cruising speed despite serious EM risk

Global: Developed world mostly resilient, emerging markets hit trouble.
US: Solid fundamentals, strong dollar hurts a little.
China: Serious wobbles but no hard landing.
Japan: Mediocre cyclical upturn, future hinges on reforms.
Eurozone: Periphery firming, core stable despite external risks.
UK: Recovery continues, Brexit risk not virulent yet.

Holger Schmieding, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: Cruising speed despite serious EM risk
18.09.2015 ECONOMIC CALENDAR - WEEK OF 21 SEPTEMBER

• Greek elections (20 September): too close to call
• EU holds extraordinary summit on migration crisis (23 September)
• German IFO business climate (24 September): likely to show some China impact
• Catalan regional elections (27 September): no convincing mandate for independence

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 21 SEPTEMBER
18.09.2015 CONSUMPTION AND HOUSING LIFT US DOMESTIC DEMAND IN Q3

The chart of the week provides a strong case for housing: although housing activity has been rising, the levels of sales and construction remain depressed, even below levels from the 1980s-1990s. This suggests substantial room for expansion.

Mickey Levy Chart of the Week Download:  CONSUMPTION AND HOUSING LIFT US DOMESTIC DEMAND IN Q3
18.09.2015 EXCESSIVELY CAUTIOUS FED PASSES ON RATE HIKE

The Fed’s Federal Open Market Committee (FOMC) voted with one dissent to keep its Federal funds rate target anchored to zero, and its members toned down their economic forecasts and lowered their assessments of the appropriate Federal funds rate path (the “dots”) through 2018 and in the long-run.

Mickey Levy Macro News Download:  EXCESSIVELY CAUTIOUS FED PASSES ON RATE HIKE
14.09.2015 EUROPEAN POLITICAL UPDATE: RUSSIA, UK, GREECE, CATALONIA

RUSSIA: LESS OF A RISK FOR NOW? Is Russian president Putin starting to realise that serious conflict with Europe and the West is bad for Russia and its badly battered economy?
UK: THE CORBYN FACTOR Having lost the national election in May partly because voters did not trust Labour to run the economy and public finances, Britain’s centre-left party now picked an old-fashioned leftwinger as its new leader.
GREECE: NECK AND NECK One week ahead of the snap elections on 20 September, opinion polls still project a neck-and-neck race between prime minister Tsipras’s leftist Syriza party and the centre-right New Democracy.
CATALONIA: NOISE RATHER THAN INDEPENDENCE? Opinion polls suggest that the two major nationalist parties that have joined forces to turn the vote into an indirect referendum on independence from Spain.

Holger Schmieding Macro Flash Download:  EUROPEAN POLITICAL UPDATE: RUSSIA, UK, GREECE, CATALONIA
11.09.2015 ECONOMIC CALENDAR - WEEK OF 17 SEPTEMBER

• German ZEW expectations (15 September): likely to show some China impact
• US retail sales (15 September): firm trend
• US Fed (17 September): probably no hike yet, but it is a close call

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - WEEK OF 17 SEPTEMBER
11.09.2015 UK unlikely to leave EU, despite the local noise

The EU matters. The EU accounts for 45% (£227bn) of UK exports and 53% of UK imports (£288bn). In 2014, the UK ran a trade deficit of £61bn with the EU in 2014.
Almost 10% of the UK labour force is linked to commerce with EU. Both the coalition and the previous Labour government estimate that around 3m people earn their living by producing goods and services that are exported to the EU.

Kallum Pickering UK Macro Update Download:  UK unlikely to leave EU, despite the local noise
11.09.2015 UK: THE STRENGTH AND THE WEAKNESS

Britain is Great: Thanks to its flexible markets and its efficient public service, the UK has one of the most dynamic economies in the developed world. With some pro-growth reforms and a rise in the retirement age, its government continues to strengthen the country’s long-term potential. As the de facto European capital for services, London has turned itself into a unique economic engine and a magnet for skills.

Holger Schmieding, Kallum Pickering Chart of the Week Download:  UK: THE STRENGTH AND THE WEAKNESS
10.09.2015 BOE MINUTES: RISK PROSPECTS HEIGHTENED

Wait and see minutes from the Bank of England. The Bank of England voted 8-1 in favour of holding the policy rate at 0.5% and unanimously in favour of maintaining the stock of assets purchased via QE at £375 billion. The collective judgement of the MPC was that whilst the risks stemming from recent headwinds had worsened somewhat, they had not increased sufficiently to warrant a revision to the near-term outlook

Kallum Pickering Macro Flash Download:  BOE MINUTES: RISK PROSPECTS HEIGHTENED
09.09.2015 MIGRATION: NOTES ON THE POTENTIAL IMPACT ON EUROPE

Looking for safety and a job. The rise in immigration has become a major issue in Europe. To some extent, the pictures of migrants trying to make their way north after having crossed the Mediterranean or Aegean Sea also illustrate an age-old truth: on top of fleeing war, unrest and often destitution back home, migrants also want to work. In Europe today that mostly means going to Germany, Scandinavia, Britain and some other places such as the Netherlands.

Holger Schmieding Macro Flash Download:  MIGRATION: NOTES ON THE POTENTIAL IMPACT ON EUROPE
09.09.2015 UK UPDATE: INDUSTRIAL PRODUCTION AND TRADE, OUCH

Industrial production declines for second consecutive month. Industrial output fell 0.4% mom in July following a 0.4% fall in June.

Trade hit by non-EU exports. The trade deficit for goods and services widened by £2.6 billion compared to June, owing to a significant widening of the trade deficit in goods which increased to £11.1 billion in July from £8.5 billion in July.

 

 

Kallum Pickering Macro Flash Download:  UK UPDATE: INDUSTRIAL PRODUCTION AND TRADE, OUCH
09.09.2015 FORECASTS AT A GLANCE: Cruising speed despite serious EM risk

Global: Developed world mostly resilient, emerging markets hit trouble.
US: Solid fundamentals, strong dollar hurts a little.
China: Serious wobbles but no hard landing.
Japan: Mediocre cyclical upturn, future hinges on reforms.
Eurozone: Periphery firming, core stable despite external risks.
UK: Recovery continues, Brexit risk not virulent yet.

Holger Schmieding, Kallum Pickering Macro Flash Download:  FORECASTS AT A GLANCE: Cruising speed despite serious EM risk
04.09.2015 ECONOMIC CALENDAR - Week of 7 September

Eurozone GDP Q2 (08 September): Upward revision?
BoE bank rate (10 September): 9-0 vote split (external risks)
China industrial production (13 September): Gradual slowdown

Holger Schmieding Global Macro Update Download:  ECONOMIC CALENDAR - Week of 7 September
04.09.2015 Right-wing populism: the real tail risk in Europe

The risk of a right-wing populist backlash against immigration is neither new nor confined to Europe. In the US, Ross Perot thrived on it for a while in the 1990s just as Donald Trump does today. It has little to do with either the European Union or the euro. Right-wing populists have made waves in countries ranging from the UK (UKIP) to Italy (Lega Nord), from Sweden (Sweden Democrats) to France (Front National) and Austria (FPÖ).

Holger Schmieding, Kallum Pickering Chart of the Week Download:  Right-wing populism: the real tail risk in Europe
Berenberg Wappen