Italy’s 66th government since WW2 looks set to fall

Trade continues to dominate the headlines with Donald Trump’s tweets around US tariffs driving sentiment. The emergence of China’s appetite to use its currency as a shock absorber also added volatility. August’s volumes are traditionally lighter and that helped catalyse a very weak start for US equities albeit a lot of the losses had been … Continue reading “Italy’s 66th government since WW2 looks set to fall”

Will the UK economy slip into recession?

Disappointing GDP data shows the UK economy contracted in the second quarter and raises the risk of the country entering a technical recession. The UK economy contracted by 0.2% in the second quarter, following 0.5% growth at the start of the year. What was behind the data? A sharp drop in manufacturing output (-2.3%) over … Continue reading “Will the UK economy slip into recession?”

Why a pick-up in UK growth may prove deceptive

Recent economic data from the UK has improved but signs are that this is due to stockpiling ahead of worries over potential Brexit disruption. Brexit continues to dominate news and politics in the UK. Even lowly economists pray for a break from the mundane gridlock and circular arguments. Now that the Brexit deadline has been … Continue reading “Why a pick-up in UK growth may prove deceptive”

Japan gets into party mood – how will markets respond?

Japan had been fighting deflation for years since the great crash of its banks and property market thirty years ago. An ageing population saves a lot. Population numbers are falling so GDP will not grow as quickly as in places like the US and UK where migration adds to the numbers. Companies are worried about … Continue reading “Japan gets into party mood – how will markets respond?”

Will France cut taxes in response to protests?

For 21 weeks now, the Gilets Jaunes have taken to the streets of French cities to protest. It began as a demonstration against high and rising fuel taxes. These tax increases hit families getting children to school and the adults to work, and cut the earnings of the self-employed working from their vans and cars. … Continue reading “Will France cut taxes in response to protests?”

Are investors too pessimistic on European shares?

European equities had a tough 2018 with the benchmark MSCI Europe index falling 10.6% over the year. Trade wars, reduced support from central banks and slower economic growth were among the factors that saw higher risk assets such as equities fall out of favour. Despite the difficult global backdrop, the eurozone economy continued to expand … Continue reading “Are investors too pessimistic on European shares?”

How has Japan’s economy fared?

The Japanese economy shrank in the third quarter. Poor export performance combined with a small reduction in demand at home to produce a 0.3% contraction. Japan is quite exposed to the dangers of the trade war, with good exporting companies needing a favourable background for their products. It also finds it difficult to expand domestic … Continue reading “How has Japan’s economy fared?”

UK GDP growth remains sluggish

Latest figures from the Office for National Statistics show the UK economy saw a small pick-up in GDP growth, but the overall environment remains sluggish. The preliminary estimate shows second quarter GDP growth at 0.3% compared to 0.2% in the first quarter, and matching consensus expectations. To put the recent growth figures into context, the … Continue reading “UK GDP growth remains sluggish”

Why 2017 UK inflation fears are overdone

UK inflation in November came in higher than expected, but we think that concerns over a damaging rise in prices over the next 12-18 months are overdone. On the face of it a sharp rise in inflation looks likely, with worrying implications.  UK imports account for 30% of GDP and trade-weighted Sterling is 15% lower … Continue reading “Why 2017 UK inflation fears are overdone”

Has QE failed, and if so why are markets clamouring for more?

The aim of Quantitative Easing [QE] was to support global economic growth in the wake of the Global Financial Crisis, and help to push GDP growth back towards its trend rate, typically around 3.2 – 3.5% for the world and 2 – 2.5% for the UK. This would allow the amount of outstanding debt to … Continue reading “Has QE failed, and if so why are markets clamouring for more?”

Has China borrowed too much?

The worriers are back warning us that China has borrowed too much. If China was assessed by the same standards as the advanced world, they would be taking a different view. In China, state debt is only around 40% of GDP, compared to six times that amount in neighbouring Japan. The hostile commentators look at … Continue reading “Has China borrowed too much?”

Should we worry about Japanese debts?

Investors like to worry. When you’ve got your money at risk it is natural to do so. It is commonplace to read about the very high levels of Japanese state debt, with some querying how much longer it can carry on. Japan has the highest level of state indebtedness of the main economies. Its gross … Continue reading “Should we worry about Japanese debts?”

Stable growth for China as long term costs mount

Chinese GDP growth was in line with expectations but is there a slowdown ahead? Chinese third quarter GDP grew 6.7% year-on-year, in line with expectations, and unchanged from the second quarter. A breakdown of the data reveals an acceleration in primary industry and a smaller increase in the tertiary, or services, sector. Manufacturing managed stable … Continue reading “Stable growth for China as long term costs mount”