Macroview

Japan services PMI rebounds strongly in October

The Japanese services purchasing managers index (PMI) rose sharply in October, surging by 2.2 points to 52.4, after a notable drop in September. The manufacturing PMI rose as well, but more moderately, reaching 52.9 in October from 52.4 in September. The rise in services PMI suggests domestic demand remains solid. On the one hand, household […]

US employment and wage growth continue to shine

US employment grew by 250,000 in October (+1.7% y-o-y); the 3-month average is now a solid 218,000/month, and October payroll results were strong, which bodes well for US GDP growth in Q4. It appears therefore that the US’ heated rhetoric towards China is having little effect so far on the US economy. The mere fact […]

Weekly View – Temporary relief

Several factors halted the equity sell-off last week. Investors continued to take a jaundiced eye of some corporate guidance, but Q3 earnings growth has finally turned out as good as in previous quarters (around 25% year on year for the S&P 500).  The sky has seemed to brighten on other fronts too. Most conspicuously, oil […]

Gridlock in Washington and the markets

The US midterm elections take place on Tuesday 6 November. Based on recent polls, the most likely outcome is that the Democrats will regain a small majority in the House of Representatives, while the Republicans keep a small majority in the Senate. Should the Democrats take control of the House, Washington D.C. could be back […]

House View, November 2018

Asset Allocation While the recent sell-off might have been overdone in view of fundamentals that remain basically sound, market gyrations and our expectation of further volatility mean we remain neutral equities overall. The current environment favours active management and a tactical allocation approach, exemplified by the partial sale of equity options we acquired to protect […]

The beginning of the end for Angela Merkel

As a consequence of the heavy drop of support in recent regional elections, Chancellor Angela Merkel has declared she would not run again for leadership of the CDU at the 6-8 December party convention. Merkel also said she would retire from politics at the end of the current parliament in 2021. It is questionable whether […]

Rebound in inflation data brings some relief to the ECB

Euro area flash HICP rose from 2.1% year on year (y-o-y) in September to 2.2% in October, in line with expectations and the highest level since December 2012. Crucially, core inflation (HICP excluding energy, food, alcohol and tobacco) rebounded from 0.9% to 1.1% in October. Energy inflation rose to 10.6% y-o-y from 9.5% y-o-y in […]

Northern US states are increasingly losing workers to the South

One salient feature of the US since its foundation has been the dynamism of internal migration. In recent decades, the trend has mostly been one of southern and western tropism, with an outflow of population from the north (the northeast in particular), to the south and west of the country. This trend seems to have […]

Euro area’s initial growth figures for Q3 prove disappointing

According to initial estimates, growth in the euro area slowed in Q3 to 0.2% q-o-q (quarter on quarter) from 0.4% in Q2. These latest GDP results were below consensus expectations and our own forecast. This was the weakest quarterly growth figure for the euro area since Q2 2014 and marks the widest divergence vis-à-vis the […]

China’s fiscal policy turns more proactive

As the economy continues to decelerate, the Chinese government is ramping up fiscal policy, in order to offset downward pressure. Since June, the government’s fiscal spending has picked up significantly, although it remains fairly modest compared with previous years. In the first five months of the year, China’s fiscal policy was on the tight side, […]

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