Eurozone cycle probably turning up despite soft PMI

ECB President Mario Draghi last week expressed pessimism about near-term Eurozone economic prospects, citing a weak November “flash” purchasing managers’ survey. The survey, he said, “suggests a stronger recovery is unlikely in the coming months, with new orders falling for … Read More

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Chinese rate cut: quick comment

Weak Chinese October monetary data signalled that additional policy stimulus would be required to sustain economic growth at its recent pace – see previous post. The People’s Bank announced a modest easing step today, lowering the benchmark one-year bank lending … Read More

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Eurozone recession fears echo misplaced 2013 UK scare

Current Eurozone triple-dip recession worries are reminiscent of a similar scare in the UK in early 2013*. Monetary trends and other evidence suggest that they are equally groundless. Both scares were triggered partly by weak but distorted economic data. UK … Read More

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UK inflation: headline weakness, core resilience

Posts here from summer 2013 suggested that the trend in UK consumer price inflation would shift from down to up in spring 2014 in lagged response to faster monetary growth and associated economic strength. This forecast has proved wrong because … Read More

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Chinese money trends weakening again

Chinese October activity news last week was satisfactory but slower monetary expansion suggests that further policy easing is required to keep economic growth on track. Industrial output rose by a seasonally-adjusted* 0.7% last month after a 1.7% in gain in … Read More

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UK earnings pick-up overshadows Inflation Report

A September post suggested that UK average earnings growth was about to rise significantly, based on the historical relationship with job openings (vacancies). The annual increase in whole-economy average weekly regular earnings was then 0.8%, referring to July, but has … Read More

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Japanese money trends strengthening before QE boost

Japanese monetary growth continued to pick up in October, suggesting an improving economic outlook and questioning the necessity of the Bank of Japan’s latest QE expansion. As previously discussed, six-month growth of all the published aggregates slumped during the first … Read More

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Equities versus cash investment rules: an update

Previous posts have described two simple investment rules for switching between global equities and US dollar cash. As detailed below, one of the rules is positive on equities while the other prefers cash. The first rule holds equities or cash … Read More

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Some cautionary signals for dollar bulls

“Dollar smashes through resistance as mega-rally gathers pace”, claims the title of an article on telegraph.co.uk. The dollar may be in a longer-term uptrend but its trade-weighted index is testing rather than already through important resistance, while relative economic prospects … Read More

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Japanese QE may remain ineffective without reserves rate cut

The Bank of Japan (BoJ) has expanded QE to include equities using the Government Pension Investment Fund (GPIF) as a conduit. The BoJ will raise its rate of Japanese government bond (JGB) purchases by ¥30 trillion per annum, financed partly … Read More

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