Continuum Economics

Companies have seemingly reacted positively to the more settled political climate that the December 12 election result brought. However, the fact that the future trade relationship with the EU is not only unclear but that a fresh cliff-edge exists at the end of 2020, is making firms even more sceptical that any deal beckons in the near future (Figure 1). In particular, we doubt not only that companies are about to revive hitherto deferred capital expenditure (capex) plans, but we also identify emerging tangible evidence that within manufacturing more capex cuts may still be the norm. READ FULL ARTICLE: http://bit.ly/31KC7Sv
#Brexit #Boris #UK #UnitedKingdom #Macro #Politics #Policy #Markets #FX #2020 #EU #Trade #Deal

The impact of the virus on China’s economy is still uncertain as is its effect on other countries, but uncertainty is already pressuring LatAm currencies. LatAm FX weakness is likely to correct once the speed of transmission slows down. There are, therefore, potential gains in the region, to varying degrees. READ FULL ARTICLE: http://bit.ly/2H4Vyfr
#coronavirus #china #latam #economy #markets #brazil #mexico #colombia #chile #argentina #peru #USD #BRL #MXN #COP #CLP #ARS #PEN #Latin

The European Commission (EC), headed by Ursula von der Leyen, has put environmental sustainability plan is very ambitious and spans decades, but faces the risk of being sidelined at the first recession. In detail, although apparently significant, the €1 trillion mobilized by the European Green Deal (of which there is little fresh money) will not be sufficient to meet the EC’s bold targets. The success of the plan will depend on the EC’s ability to leverage those funds by crowding in the private sector and national governments, with the largest EU Member States already de facto funding much of the €1 trillion via the EU budget. EU legislation will be key to force the generation of the additional investment needed. READ FULL ARTICLE: http://bit.ly/2vPf2lL

Acceleration in inflation to above-target levels will keep the Reserve Bank of India (RBI) on Hold in February, although easing may resume in H2. Growth slowdown concerns are likely to linger, but an expansionary fiscal budget will put a floor to the weakness. READ FULL ARTICLE: http://bit.ly/39aeUMd
#India #reserve #bank #budget #RBI #inflation #policy #emerging #markets #centralbank #EM #ASIA #ReserveBankofIndia

GBP may be cheap against USD from a longer-term perspective, but this reflects dollar strength, not sterling weakness. In general, GBP looks no better than fair against other majors, and may suffer a re-rating lower in the next couple of years. READ FULL ARTICLE: http://bit.ly/2ScbhP1
#GBP #USD # Macroeconomics #Macro #Economics #FX #UK #US #EURGBP #GBPUSD #currency #money #ppp #dollar #pound #2021

Together with Putin’s new growth push and a social expenditure boost of RUB 400-500 billion, we think that the sidelining of Siluanov indicates that Putin is being seduced into increasing the fiscal rule’s oil price threshold to USD 45/bbl, implying a USD 5/bbl increase from the USD 40/bbl initial threshold set in 2018. READ FULL ARTICLE: http://bit.ly/2GDJth9

Sanctions that encompass large groups of nations (by agreement or pressure) are more effective than embargoes or blockades that involve only a handful of countries. Sanctions are also more effective if a global superpower leads the efforts (e.g. the U.S.), rather than a regional player (e.g. Saudi Arabia). This means that the blockade on Qatar has been less effective than the sanctions reimposed on Iran. Going forward, the outcome of the U.S. presidential election will likely have more of an impact on Iran than other countries that currently face broad U.S. sanctions. North Korea and Syria are dependent on their regimes compromising first. READ FULL ARTICLE: http://bit.ly/2U8SnLf

New Article: The impact of Corona virus on the Financial Market Author: Mike Gallagher (Managing Director, Macroeconomics & Strategy) READ ARTICLE: http://bit.ly/2uDsiJH
#corona #virus #macroeconomics #strategy #financial #markets #china #outbreak #worldhealth #health #equity

Read a condensed, visual guide to our key global macro-market views and forecasts. This month includes a focus on the U.S. democrats spending plans. ACCESS FULL ARTICLE: http://bit.ly/37uexeS

In EM, economic nationalism now takes indirect forms, such as increasing tax pressures, export restrictions, tougher local content requirements, more stringent regulatory requirements, contract reviews and a general increase in government involvement in a sector. And while Corbyn made no secret of his plans, EM nationalisation often catches investors unaware. Hence, it becomes key to follow EM developments on an ongoing basis to have as much visibility as possible on the risk of increased economic nationalism. We focus on the economic nationalism in the Democratic Republic of Congo (DRC), Bolivia and Russia, whose resources are strategic in the global economy’s move toward carbon neutrality. READ FULL ARTICLE: http://bit.ly/2tWcUrI

The Iowa Caucus on February 3 kicks off the race for the Democratic Nomination. Alongside the New Hampshire Primary on February 11, market attention will focus on what this does for momentum into Super Tuesday March 3. Polls currently suggest that Sanders could win Iowa and New Hampshire, which will likely produce some nervousness in riskier U.S. financial markets if this happens. READ FULL ARTICLE: http://bit.ly/3aLMBVK

From everyone here at the Continuum Economics Team, we wish you all a very Happy Chinese New Year! Gong Hei Fat Choy!
Test your knowledge of the Chinese New Year by clicking the link below: http://bit.ly/36qJS0w #Chinese #NewYear #2020 #YearOfTheRat #GongHeiFatChoy #Jan25 #Rat

Chilean President Sebastian Piñera announced on Wednesday night that he will be sending a new pension bill to Congress this week. The reform could be classified as a re distributive one. On aggregate, we expect this measure to initially increase labour costs, reduce margins and slightly increase future personal income. In terms of public finances, however, we believe the bill kicks the can down the road, as it makes the pension system less sustainable in the long run. A collateral effect is that the reform will probably hurt Chilean small caps. READ FULL ARTICLE: http://bit.ly/2RpjDDx

Heavy rains have offered a reprieve to Australia’s bush fire crisis. However, it is likely to be temporary, as historically, the fire season peaks in February. The economic impact are unclear since this is an unprecedented crisis. We do not expect a sizeable negative impact on GDP due to offsetting contributions from government expenditure and charitable donations. More importantly, the damage is mainly to non-productive assets and the overwhelming support this crisis is receiving may help to resolve the situation sooner than expected. The downside risks to Australia’s growth is still underpinned by weak household consumption. READ FULL ARTICLE: http://bit.ly/36g4XuM #Australia #BushFire #GDP

China’s Q4 GDP data is due on January 17, and we see growth steadying at 6% y/y. Our proprietary China tracker points to some stabilization of economic activity since November. Green shoots are sprouting in a few segments of the economy, including manufacturing, freight turnover, industrial profits and ‘new economy’ retail sales. The stronger-than-expected data suggest that the Chinese economy could be stabilizing in Q4, albeit at low levels. While easing trade tensions could relieve some pressures off the external sector, domestic demand holds the key for China's economic recovery. READ FULL ARTICLE: http://bit.ly/2GiFFSd

While we still believe that Biden will win the Democratic nomination, this will not become clear until well into the spring. In the meantime, uncertainty over future policy could adversely impact U.S. financial market, business and consumer confidence in H1 due to fear of higher taxes, despite proposals for expansive fiscal policy. READ FULL ARTICLE: http://bit.ly/2Rf6EUQ

We maintain a constructive view toward riskier assets, as G3 central banks continue to add liquidity and policymakers remain vigilant to ensure growth. However, with the U.S. presidential election stepping up a gear, financial markets there will likely be restrained. READ FULL ARTICLE: http://bit.ly/3atPhHE