Economic data remains weak and Q2 GDP numbers will be awful almost everywhere But confidence is rising, if from low levels and frequently rising more than expected It is difficult to spot real time turning points, but it does seem that the recovery has begun Q2 GDP data will begin…
Output growth in the second half of 2020 and 2021 is likely to be well above trend Current inflation data is meaningless, but 2021 and 2022 will see high inflation This assumes that global lockdowns end over the summer This is a follow-up to The case for higher inflation published…
Over the past two months, broad money growth has surged in key world economies This monetary stimulus, part of the response to the COVID-19 pandemic, will remain in place Sustained double-digit broad money growth is inconsistent with subdued inflation (It is more than a year since I last published a…
Business and consumer confidence have recently deteriorated after a strong 2018 Levels are still high, but the trend is worrying Continued falls would imply a longer and deeper downturn in 2019 One of the peculiar developments for much of 2018 was that, while broad money growth slowed substantially (something we…
The global policy mix is shifting from loose monetary/tight fiscal to loose fiscal/tighter monetary This will exacerbate the 2019 slowdown already heralded by monetary data Financial assets will suffer For much of the post-Great Recession era, economic policy in most major economies has been characterised by a mix of tight…
After one year of QT, the Fed’s balance sheet has slimmed by just over $300bn (-6.6%) Although the US government deficit has widened, broad money growth has halved The Fed will still raise interest rates in December; but ‘three hikes in 2019’ is no longer on Last week, we had…
Inflation-targeting independent central banks have a longer history than most CB regimes Market complacency that current regimes will remain is probably too optimistic Most new regimes mooted mean higher, more volatile inflation and thus lower growth Central bank and monetary policy regimes last longer than expected, but also change faster…
Over winter, broad money growth in the largest developed markets has slowed down At the same time, the growth of US large time deposits has slumped If maintained, current money trends point to below-trend growth and weaker asset prices In early January we wrote that broad money growth in the…
Broad money growth in all four large advanced economies is healthy, but slowing Crucially, the growth of non-bank financial institutions’ money holdings is subdued Money data point to continued but somewhat less support for assets As we enter into 2018, broad money growth in all major advanced economies is presenting…
Bond markets move in long – secular – cycles, with at least five since the 1870s After a bull market since 1982, we are now likely headed for a multi-decade bear market However, bond yields are unlikely to reach levels seen from the 1970s to the mid-1990s Bond markets, like…
