United States: Economic State Of The Union Is… Not Bad

Five weeks ago, I argued that the US economy was strong enough to warrant another couple of interest rate increases during the first half of 2019 followed by a pause. Economic data since (and the prolonged partial shutdown of the federal government) has justified a more cautious approach to short-term monetary policy.   The situation…

Global economic outlook continues to slide

The latest update of IMF’s World Economic Outlook was not pleasant reading. It was the second 0.2 percentage points downgrade of the forecast for 2019 in three months. This time to 3.5% – the lowest growth rate since the mini-EM meltdown in 2015/16. Moreover, the risks to the outlook are to the downside and more…

European headwinds

While markets have been fretting about the risk of a recession in the US, the euro area is moving much closer to a negative growth surprise. The deterioration of confidence has been steady and broad-based, but pockets of substantial weakness are adding to downside risks. Central to the gloomy situation is the German manufacturing sector.…

Uncertain 2019 awaits the United States

Christmas was muted in Washington this year.   With a quarter of the federal government shut down for the foreseeable future, many furloughed federal workers, those living paycheck to paycheck, are having a particularly gruesome time. The budget standoff could well extend into 2019, when Democrats take power in the House of Representatives. The quitting/firing/retirement…

OPEC’s balancing act

When the oil-producing countries (OPEC) and Russia met in Vienna early December, they had managed to lower expectations quite substantially. Hence, the agreed production cut of 1.2 million b/d took the market by surprise. OPEC-countries will reduce production by 0.8 million b/d, while the non-OPEC group led by Russia will cut by a further 0.4…

Macron risks it all

The French President Macron made a series of expensive promises in his national address on Monday night in an attempt to placate the gilets jaunes protesters, who have transformed inner cities into battle zones across France. One must hope the movement appreciates the gesture, because Macron is risking his entire political project on this. Most…

Trade truce only temporary respite

At the G20-meeting in Buenos Aires, President Trump and China’s President Xi agreed to a truce in the ongoing trade war. Affirming their respectful relationship, the two leaders agreed to stop the clock on new measures and allow for 90 days of negotiations. President Trump will not raise tariffs on Chinese goods during this period,…

US housing market is stalling

Several years of housing market strength has come to a halt.   This was not how it was supposed to be: the housing market has traditionally been one of the main drivers of US growth and particularly strong during periods of booming economic growth. A growing population produces an ever-increasing demand for new units, exacerbated…

Divorce papers are finalized

Even on his 70th birthday, Prince Charles was overshadowed. The presentation of the Brexit divorce bill – 585 pages long – sucked all the oxygen out of London and Brussels. A detailed and comprehensive agreement; a legal, internationally binding agreement, no matter what the outcome of the ensuing trade negotiations will be. The divorce agreement…

Bipartisan compromise or partisan warfare?

The US midterm elections produced gains for the Democrats, but not the “blue wave” they had been hoping for. Taking control of the House of Representatives was an important achievement, and Republicans were decimated in New England and the Mid-Atlantic region. If Republican incumbent Poliquin lose in Maine’s 2nd district (a new ranked-choice system will…