The direct macro cost on the US economy of the raised tariffs to 25% from 10%, and the fresh counter-tariffs from China, should be limited in our view, at around 0.1% of US GDP. The US economy tends to be much more sensitive to financial conditions than to the narrow question of the tariffs’ impact […]
As a US-China trade negotiation impasse became evident last week, markets corrected a bit, particularly cyclical sectors. Given the strong US economy, Trump is feeling empowered to pursue his agenda, raising existing tariffs from 10-25% on USD 200bn worth of goods with immediate effect and threatening more. Now we will wait to see how China […]
Following a series of townhall meetings with French citizens up and down France, President Emmanuel Macron responded to social unrest with two doses of fiscal easing. The December package (worth EUR10bn) was incorporated in the stability plan sent to Brussels before Easter and is included in the 3.1% public deficit planned for this year. The […]
The increase in prices that followed President Trump’s 22 April decision to end waivers on Iranian oil imports did not last, with Brent prices falling from almost USD75 on 24 April to below USD70. Nonetheless, we continue to see heightened risk of oil price spikes above USD80 for Brent in the short-term. Trump’s recent threat […]
At the weekend, US President Trump threatened to increase the tariff rate on Chinese imports as he believes that US-China trade negotiations are going “too slowly”. Importantly, Trump’s threats do not mean bilateral talks are breaking down. Indeed, the Chinese government confirmed today that its trade delegation would still go to Washington DC this week […]
Last week markets were relatively muted, with commodities down, developed markets flat and emerging markets up slightly. That brief period of calm has already ended, with Trump’s Sunday tweets sending Chinese markets sharply down on Monday. With the Chinese scheduled to attend the next round of trade negotiations in the US on Wednesday, the US […]
Asset Allocation There were no changes to our asset allocation in April. While we are encouraged by better-than-expected Q1 earnings and some improvement in earnings expectations, we remain neutral on global equities as we await new catalysts to justify current valuations. At the same time, we have a positive view of Chinese and Indian equities. […]
The Fed meeting concluding on 1 May should provide only limited new information. The domestic growth backdrop is good and equity markets are buoyant, but low core inflation and the proximity of the theoretical ‘neutral rate’ will likely stifle the Fed’s temptations to raise rates. Instead, the Fed should signal it is happy to stay […]
The European Central Bank (ECB) surprised market watchers with its dovish turn in January, wiping out any prospect of an interest rate rise this year and revising its growth projections for the euro area downward for 2019. With Europeans set to live with interest rates at zero (or negative) for longer, many are wondering if […]
On April 28, Spain held its third general election in less than four years. As was expected, the centre-left Socialists (PSOE) emerged the largest party, but it does not have an absolute majority, so negotiations with other parties will be needed. But the political fog in Spain is unlikely to lift much before the regional and […]
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