Surging euro area optimism

The EU-Commission’s Economic Sentiment Indicator (ESI) showed another increase in October from 113.2 to 114. This is the highest level since 2000, surpassing the optimism in the years prior to the financial crisis. For the euro area as a whole, there were increases in all subcomponents with construction increasing the most during the last year.…

Upbeat US economic data

US economic data continues to impress. GDP grew by 3.0% q/q (annualized) in Q3 despite a negative impact from hurricanes. I had expected 2.5% quarterly growth, but the large positive contribution from inventories (0.7pp) pushed up the overall growth rate more than I had expected. This could be reversed in Q4. While the loss of…

Baby steps in Frankfurt

Fly on the wings of doves In a major victory for ECB’s dovish camp, the European central bank decided today to extend the bond purchase program until the end of September 2018, at a reduced pace of EUR30 billion per month. Moreover, the ECB kept the dovish wording in the press release promising to extend…

Dispatch from Texas

Austin growing up Arriving in Austin, Texas from Washington, DC is always a study in similarities and differences; both green and leafy. Each city has sturdy economic and population growth, and both are liberal cities; Austin not as much as DC, but is still “the blueberry in the red Texan sea”. Both Austin and DC have…

Dispatch from Washington DC

Washington is a difficult nut to crack. 94% of the locals voted for Hillary Clinton and are unified in their condemnation of what is going on in the Trump White House. Moderate Republicans meet questions with a stiff upper lip and hopes for the best. Trade organizations and think tanks all have agendas – some…

Trump, trade and taxes

The noise level in Washington remains painfully high with frequent presidential Twitter storms attacking friends and foes. But on trade – where much action was expected – it has been rather calm. Yes, Canadian softwood lumber producers have been hit by preliminary tariffs – as has Bombardier recently. But these cases have been handled within…

One less vacancy

On 5 October, Randal Quarles was confirmed by the Senate to fill one of the four vacancies on the Federal Reserve Board. Quarles was nominated for the vice chair in charge of financial regulation and is likely to push for more deregulation. To highlight that financial regulation is a focus area for the Administration, the…

A noisy and contradictory September job report

Key takeaway: The noisy and contradictory September job report is not going to keep the Federal Reserve from increasing rates in December. The pickup in wage growth must have surprised most members of the monetary-policy committee (FOMC): is this a sign that Yellen wage “mystery” is going away? It is too soon to jump to…

Theresa May’s not so good autumn

What a difference a year makes! At the Conservative Party Conference last year, a confident PM May spooked markets by confirming that the UK was not seeking any of the various soft Brexit options that were floated by Remainers, but was indeed seeking to restore full and complete independence: “But let’s state one thing loud…

The Trump tax challenge

Republican leaders from the White House and Congress on 28 September introduced the much-anticipated unified framework for tax reform. The nine-page framework comes after weeks of discussion and is successor to the one-page proposal the White House introduced in April. However, stripping out the buzzwords, it is really still just one page long and contains…