by Simon Ward
US annual CPI inflation excluding food and energy rose to 2.39% in August, the highest since 2008. Is the pick-up in core inflation long predicted by Phillips curve adherents finally materialising?
by Andrew Mulliner, CFA
Andrew Mulliner, Portfolio Manager on the Global Bonds Team, reflects on the European Central Bank’s decision to cut rates and bring back quantitative easing.
Equity analysts returned from holiday and slashed earnings estimates.
UK labour market trends remain consistent with the view here that the economy has entered a recession.
August PMI results are consistent with the long-standing expectation here that global industrial momentum would bottom around Q3 2019 but narrow money trends have yet to signal an economic recovery.
Euroland money measures grew strongly in July, more than compensating for softer June data and suggesting improving economic prospects.
The preferred narrative of central bankers and mainstream economists is that current global economic weakness primarily reflects US-driven trade policy conflict
Narrow money trends have been signalling US economic weakness but a stabilisation of momentum in Euroland, with no recession.
Investors were spooked last week by a further inversion of the US Treasury yield curve but the manner of the inversion casts doubt on the validity of the associated recession warning.
Incoming narrow money data for July have been disappointing, suggesting that a global economic recovery will be delayed until Q2 2020.
According to Gluskin Sheff economist David Rosenberg, recessions in the US “historically begin when the unemployment rate climbs 0.4 percentage points above its cycle low”.
Chinese July money numbers were very disappointing, signalling that an economic recovery remains distant. More decisive monetary policy easing is urgently required but the authorities are constrained by a teetering RMB and surging food prices.
The immediate global economic outlook remains weak but cycle analysis suggests that 2020 will be a recovery year.
Information about the removal of performance fees from four funds within the Janus Henderson Horizon Fund (SICAV), effective 1 July 2019.
The long-standing forecast here has been that global industrial momentum would reach a low around Q3 2019. The latest business surveys are consistent with this forecast.
The big news in last week’s US GDP release was a huge downward revision to corporate profits growth in recent years.
The European Central Bank (ECB) meeting on 25 July was billed as the most important ECB meeting of the last few years. Andrew Mulliner, Portfolio Manager within Global Bonds, reflects on the outcome of this highly anticipated session.
The Euroland manufacturing PMI fell further in July but the view here remains that the index is bottoming, based on the leading signal from a rise in six-month real narrow money growth since late 2018 – see first chart.
Three-month growth of US commercial bank loans and leases fell from 1.5% (6.3% annualised) in February to 0.9% (3.5%) in June, reflecting a sharp slowdown in commercial and industrial (C&I) lending – see first chart.
As discussed in Tuesday’s post, global narrow money trends suggest that economic momentum will bottom out in the third quarter of 2019 but remain weak into early 2020.
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