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14 ноября, 18:04

The economic acceleration in Europe underpins global growth

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Since the EU had been a growth laggard due to the European sovereign debt crisis, the pickup in growth there is encouraging. In particular, Italy deserves mention as it has lagged and is where I believe the battle for the EU’s future will be won. Some thoughts below Related posts: The threat of an overheated German economy Why the election timetable favours the Five Star Movement in Italy The economics for populism no longer exist in Europe

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08 ноября, 00:32

Why the flattening yield curve doesn’t worry me yet

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If you look at the yield curve since the early 80s double dip recession, what you’ll notice is that inversion – where 2-year rates exceed 10-year rates - precedes every recession. Right now, we’re still 70 basis points from inversion though. So far from expecting a slowdown or a recession, I would sooner expect economic acceleration. Let me go into detail below. Related posts: Jobless claims and ADP data positive ahead of jobs report The Fed will continue to look through weak Q1 data What are credit markets signalling about the US economy?

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03 ноября, 16:11

No recession until at least late 2018

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The US economy added 261,000 jobs in October bringing the baseline unemployment rate down to 4.1%, the lowest in nearly two decades. And while this number was short of expectations, revisions to the prior two months’ data meant a net gain close to the consensus estimates. Going forward, the concern has to be that we are late in the cycle. So we need to think about how fiscal and monetary policy will develop. Related posts: Quick thought on how jobless claims matter Jobless claims and ADP data positive ahead of jobs report The one data series you should follow to know if the US expansion is in good shape

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02 ноября, 15:53

First piece of data that tells you the US economy is humming

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As we await the jobs number tomorrow, we should be fairly confident that the results will show an improving employment picture, especially in the wake of a hurricane plagued report last month. Related posts: Quick thought on how jobless claims matter Jobless claims and ADP data positive ahead of jobs report The one data series you should follow to know if the US expansion is in good shape

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01 ноября, 16:21

Let me tell you why I’m still worried before detailing the positive economic data

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Yesterday I promised you to “look at individual economic data points and tell you why I think they bolster the case for optimism about the economic trajectory.” But before I get into that let me tell you why I still worry about the foundation of this global recovery. And a lot of it has to do with the pace of growth and with inequality. Let’s look at the US here. Related posts: Germany is the biggest loser in 2017 Trump is dead wrong on Germany. It won’t matter though All politics are local: understanding Trump’s threats and misunderstanding Merkel’s disappointment

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31 октября, 17:55

The global economy is hitting its stride right now

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Most of the recent economic news from developed economies has been good. European growth, in particular, seems to have accelerated. Nothing I see in the economic data causes me worry. So I am cautiously optimistic that this upturn will last at least through 2018. So let me go through the data, my outlook and my concerns. Related posts: Will Brexit’s trigger, now set for 29 March, mean recession? Quick thought on how jobless claims matter Jobless claims and ADP data positive ahead of jobs report

25 октября, 15:32

Brexit was a cry of financial pain and not the influence of the old

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There has been much debate on the determinants of the vote for Brexit. This column uses newly released data from the Understanding Society study to examine the characteristics of individuals who were for and against Brexit. Unhappiness contributed to the vote to leave the EU, but this was driven by feelings about individual financial situations rather than a general dissatisfaction with life. Brexit does not appear to have been caused by the old – only those under the age of 25 were substantially pro-Remain. Related posts: A Q&A With Prime Economics’ Jeremy Smith on Brexit, Immigration and Democracy Brexit is more important politically than it is economically Some brief thoughts on Brexit negotiations and the Norway model

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23 октября, 17:34

Overbought

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“I had to cover my shorts.” That’s what my friend Matt told me after the company came out with its quarterly earnings and issued upbeat projections. I asked Matt, “how long are you going to keep shorting these companies. This is like the 10th time you’ve been forced to cover.” I don’t remember anymore how Matt responded. But I do […] Related posts: The divergence in equity and credit markets Policy divergence revisited Trump’s abuse of power and monetary offset

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19 октября, 17:24

The one data series you should follow to know if the US expansion is in good shape

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Since we experienced a severe economic trauma due to the subprime financial crisis, there has been an almost reflexive disbelief in the durability this economic expansion. There are times when I would count myself amongst the disbelievers. For example, during the shale oil bust, I worried that Fed rate hikes would be the straw that broke the camel’s back. But […] Related posts: Quick thought on how jobless claims matter Jobless claims and ADP data positive ahead of jobs report Jobless claims are at their lowest level in 44 years

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19 октября, 16:26

Crony capitalism and redistribution

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This is a thought piece. And so it’s going to be relatively) brief since I haven’t fleshed out all of my ideas here. But I want to run something by you based on a piece Matt Klein wrote over at FT Alphaville on macro policy. Let me point to the key extract from Matt’s piece on this: Here’s the gist […] Related posts: Financial conditions have eased enough to get the Fed to hike in March Tuning out political hysteria in the US US credit growth is decelerating across a variety of areas

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18 октября, 16:27

Why the downside risks of Brexit are mounting

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While the UK economy did better than predicted in 2016 in the immediate aftermath of the referendum vote on leaving the European Union, growth has since stalled and inflation has risen. Beginning in January, I have been saying that risks from Brexit are rising. Let me reiterate that case below. Now, because this is such a contentious subject, with Britain […] Related posts: Anarchy in UK politics means lower yields and ends austerity as we know it Could the UK be headed for an inflationary recession? After Juncker-May, Britain as a tax haven is more credible

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17 октября, 15:09

Germany’s coalition talks are sowing the seeds of the euro’s breakup

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For years now within Germany’s policy circles, there have been many who have pushed for an ‘expulsion’ or ‘voluntary exit’ mechanism for the Eurozone. I am now hearing this position advocated by FDP head Christian Lindner, a potential finance minister in the new German governing coalition. I believe this affects Italy the most and sets up an existential crisis down […] Related posts: Not All Germans Love The Euro These Days More Europe What Schäuble is really saying about Macron and Europe