Greece: brief thoughts

Financial crises in peripheral / emerging economies are often symptomatic of tightening global liquidity conditions. However, Greece has lacked market access for many months and its crisis reflects the government’s voluntary decision to reject an EU / IMF support programme. The global real narrow money growth measure tracked here has slowed recently but remains solid […]

30 June 2015 by Simon Ward

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Chinese “true” M1 growth better but still subdued

Chinese economic news is likely to improve over the summer but narrow money trends suggest that growth will remain sub-par. The PBOC on Friday released additional monetary data for May, allowing the calculation of the “true” M1 measure monitored here. As previously explained, the official M1 series comprises currency in circulation and corporate demand deposits, […]

24 June 2015 by Simon Ward

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Will stronger US growth be sustained?

The balance of US activity news has improved so far in June, supporting the widely-held view that the economy is rebounding from weather- and strike-related weakness in early 2015. Monetary trends suggest that the pick-up will extend into late 2015 but investors should be wary of extrapolating optimism into 2016, for several reasons. First, monetary […]

15 June 2015 by Simon Ward

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US labour market trends suggesting September rate hike

US job openings (vacancies) surged in April, consistent with the forecast here of economic reacceleration from the spring, following a rebound in real narrow money growth in late 2014 / early 2015 – see previous post. The job openings rate (i.e. vacancies expressed as a percentage of the total number of jobs) rose to 3.7% […]

12 June 2015 by Simon Ward

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Will stronger global growth be sustained?

Global monetary trends have been suggesting faster economic growth in the second half of 2015 – see previous post. May business surveys are consistent with this scenario: a weighted average of G7 manufacturing purchasing managers’ new orders indices rose significantly, with improvements in six of the seven countries (Germany being the exception) – see first […]

6 June 2015 by Simon Ward

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US Q1 weakness genuine, money signalling rebound

Researchers at the San Francisco Fed claim that US GDP seasonal adjustments are faulty and the economy grew by 1.8% at an annualised rate in the first quarter, rather than the reported 0.2%. Since unusually bad weather probably depressed performance, this could be taken to imply that the recent US slowdown is more apparent than […]

27 May 2015 by Simon Ward

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UK inflation report: small hawkish shift

Here’s a productivity-enhancing suggestion for students of the Bank of England’s Inflation Report. To deduce the policy message, ignore the copious verbiage and focus on a single statistic – the mean forecast for inflation in two years’ time based on unchanged policy. A number above 2.0% signals that policy tightening is required. If, in addition, […]

16 May 2015 by Simon Ward

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US / UK labour cost pick-up opening door to rate rises

The best measure of US average wages is the quarterly employment cost index (ECI), which adjusts for job shifts between occupations and industries. Annual growth in ECI wages rose to 2.5% in the first quarter of 2015, the fastest since 2008. The historical relationship with the job openings or vacancies rate had signalled a pick-up […]

6 May 2015 by Simon Ward

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Why aren’t confident UK consumers rewarding the Tories?

British electors, on the face of it, are an ungrateful bunch. Consumer confidence, as measured by the EU Commission / GfK monthly indicator, is at the top of its range over the last 40 years – in the 96th percentile, to be precise, up from the 44th just before the May 2010 general election. The […]

24 April 2015 by Simon Ward

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Monetary signals strongest for US / Eurozone

Narrow money trends last autumn predicted that the Eurozone and Japanese economies would regain momentum while the US and China would slow, a shift confirmed by recent coincident data. Current monetary trends suggest that the US and Eurozone will grow solidly in the second half of 2015 with Japan expanding moderately but China remaining sluggish. […]

22 April 2015 by Simon Ward

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