Wednesday, 28 October 2015

A few macro thoughts today

A few macro thoughts today...just a few as it is another busy corporate reporting today.

ECB speaks – board member Coeure noted: ‘If There’s A Risk Of Inflation Moving To 2% Slower Than Forecast Could Cut Deposit Rate…Euro Area Growth Too Low, Government’s Don’t Coordinate Well Enough’.  Very much inline with what Draghi said last Thursday.  Now if only there could be reform…well this report asks whether Europe’s next growth locomotive could be Italy (link here).  Nice to dream...

Greece/Cyprus – Greek bank Recap To Take Place After First Review, No Later Than 15 Nov (link here). Meanwhile Cyprus To Conclude Aid Program In March As Planned (Handelsblatt)

Doing business – Britain has leapfrogged America and Norway to become the sixth easiest place in the world to do business. In its annual ease of doing business survey, the Washington-based World Bank elevated Britain from eighth position to six out of 189 countries, putting it ahead of the US, Germany and Japan. This is the second best position it has held since the World Bank started collating this data in 2003.  Singapore retained its position as the easiest place to do business for the 10th year running, while New Zealand was in second place, followed by Denmark and South Korea’. (Times)

China - the Westpac MNI China Consumer Sentiment indicator sank to a record low in eight years of data this month, falling 7.2 per cent to a score of 109.7. 

Meanwhile ‘Angela Merkel kicks off her visit to China. With the German chancellor’s eighth visit to the mainland since 2005, Germany is looking to outdo the UK’s recent business deals with China, which totaled £40 billion ($61 billion). Merkel will lead a business delegation—including new Volkswagen CEO Matthias Mueller—to the city of Hefei’ (

Asia – rise in hopes of further Australian rate cut after latest inflation data earlier today.  Meanwhile in Japan policymakers at the Bank of Japan, meeting on Friday, will take on board this morning's data showing retail sales falling 0.2 per cent in September from a year earlier — a sharp reversal from the 0.8 per cent gain in August, and weaker than expectations for a 0.4 per cent gain.

(h/t @FastFT)

The Federal Reserve is out later. I liked this chart via @enlundm on what I would regard as the key debate: the level of the US dollar:

I liked this from the Bank of England 'Bank Underground' website on why world trade has been so weak:

Global growth is expected to remain weaker than prior to the crisis, due to weaker global potential supply growth (see the recent IMF WEO chapter for more information). Given the higher variance of trade growth relative to GDP growth, that will continue to weigh on the trade growth to GDP ratio.

The weight on EMEs, which have low trade elasticities, is expected to continue rising (albeit at a slower pace than the past given the slowdown in potential growth expected over the next few years), further depressing the global trade elasticity. That will continue to weigh on world trade growth.

Finally this made me laugh on the global earnings season: 

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