Google Analytics

Sunday, September 8

8th Sep - Weekly Links #4165

I'm on Twitter.

Euro Area Macro Monitor: Calm before the storm
Danske Bank
Global macroeconomic backdrop deteriorates * Service sector expectations have weakened * New Italian government reduces risk of another budget clash

Eurozone: Uncertainties are weighing on growth ING
The eurozone economy is slowing down and with Brexit and the trade war tensions weighing on confidence, a further deceleration looks likely. If a hard Brexit were to materialise and Europe was targeted in the evolving trade war, it would be hard to avoid a technical recession and the ECB would have to act on its words

Ministers likely to clash over euro zone budget next weekReuters
EU finance ministers are likely to clash next week over how to finance a future budget for the 19 countries sharing the euro, as time runs out to reach a deal for an issue that EU leaders set as a priority in June.

Emerging Europe Watch – Resilience to a global slowdown?ABN AMRO
Growth for the CEE-3 is strong, not so for Russia and Turkey. CEE-3 is vulnerable to a reversal of FDI-flows, Turkey for shifts in portfolio flows. The direct impact of the US-China trade war for the region is low but indirect effects via eurozone imports can be substantial. CEE-3 has little room for monetary stimulus; Russia and Turkey will continue easing. Czech Republic and Russia still have ample room for fiscal support

Giugliano: Italy’s New Coalition Is Already Looking ShakyBB
Five Star and the Democrats want tax cuts and extra spending, but the two parties are bound to clash on other policies.

Election may lead us to the Brexit end game (but not necessarily)Danske Bank

Euro zone business growth remained lacklustre in August: PMI – Reuters
Euro zone's slowing growth confirmed, hit by weak trade – Reuters

Editorial: Germany’s Obsession With Fiscal Prudence Needs to GoBB
Additional spending will help an economy on the verge of recession, and give a boost to the European Union too.

Bershidsky: In Eastern Germany, the Glass Is Half Full BB
The centrist parties can build on their narrow wins, and the governing coalition will likely survive

Bershidsky: Why Germany Is Ignoring Its Own Russian Spy ScandalBB
The murder of a Chechen rebel in Berlin looks like a Russian operation, but the Merkel government is not making a public fuss about that.

Germany - Loosening the brakeDanske Bank
A closer look at the timing, size and scope of fiscal easing in Germany.

Daniel Gros: The ECB’s Deflation ObsessionProject Syndicate
It is hard to understand why the European Central Bank is currently so anxious to find new ways to make its policy stance even more expansionary. Its hyper-vigilance about falling prices is misplaced, and its ability to increase the rate of inflation is dubious.

Understanding low wage growth in the euro area and European countriesECB
Cyclical drivers, as captured by a standard Phillips curve, seem to explain much of the weakness in wage growth during this period, but not all of it. Going beyond the drivers included in standard Phillips curves, other factors are also found to have played a role, such as compositional effects, the possible non-linear reaction of wage growth to cyclical improvements, and structural and institutional factors.

ECB back to easing again, but inflation still not in its grip: Reuters pollReuters
The ECB will cut its deposit rate next week and announce a restart of its asset purchase program, but over 80% of economists polled by Reuters were skeptical about the bank's ability to influence inflation over the medium term.

Mario Draghi and the ECB confront a slowing euro zoneThe Economist
As the risk of recession in Europe rises, the ECB must act

Gavyn Davies: Mario Draghi prepared to pass on the baton at the ECBFT
The governor leaves behind a battery of monetary weapons that are now misfiring

Draghi faces up to super-charged market expectationsFT
Eyes on ECB president to deliver ‘Buzz Lightyear’ moment at policy meeting

How much ECB QE is needed? Go big, or go home!Pictet
We estimate that a new QE2 programme worth at least EUR600bn would be needed for the ECB to close a 0.50% inflation gap.

ECB meeting preview presentationDanske Bank

ECB Research - Enough talking, now is the time for actionDanske Bank
We expect the long-awaited ECB meeting to set the scene for months and  potentially quarters to  come. The question is not if the ECB will announce new initiatives but how much it will deliver.

ECB Watch: Do good things really come in small packages?Nordea
The ECB is set to announce an easing package next week but given the contradictory comments from ECB members and the large number of variables, the meeting is bound to include surprises. We would not bet on a stronger EUR yet.

ECB corporate QE and the loan supply to bank-dependent firmsECB
CSPP increased the net issuance of debt securities, triggering a shift in bank loan supply in favour of firms that do not have access to bond-based financing.

The Phillips Curve at the ECBECB

Lagarde confirms policy continuity ABN AMRO
Lagarde supports stimulus, signals framework review

Jobs: workers finally feeling it ING
Payrolls growth is slowing but wages are picking up, which underlines the difficult decision facing the Federal Reserve. The risks from a deteriorating international backdrop and a manufacturing recession mean we still look for September and December rate cuts

US labour market report: More evidence of slowing growthNordea
Nonfarm payrolls increased by 130k in August, lower than expected. Furthermore, the two last months were revised down by 20k . The unemployment rate was stable at 3.7 % while wages increased 0.4% on the month and 3.2% y/y.

Manufacturing a recessionING
The headwinds facing the US economy are building, as trade tensions intensify and evidence of global economic weakness spreads. Given this backdrop, we have cut our 2020 GDP growth forecast to 1.3% and have pencilled in an additional Fed interest rate cut

Gloom deepens for global economy FT
Weak US jobs and German factory data push central bankers towards launching stimulus

Nordea Economic OutlookNordea
Time of fear: policy choices and Nordic divergence come to the fore

China: The strategy is workingING
We believe that China has changed its strategy when it comes to the trade war, and that could lead to further market volatility. In terms of economic growth, it seems the strategy of boosting infrastructure projects is also working.

Trade war: A turn for the worseING
Although later than initially thought, we still expect a deal between the US and China * A deal before year end is likely to not be in the cards anymore * President Trump will need to compromise given the economy is slowing * We expect a deal at the start of the second quarter of 2020 * Trump is likely to refrain from a trade war with the EU

Understanding what works for active labour market policiesvoxeu
Governments around the world spend a large portion of their budgets on active labour market policies aimed at improving access to new jobs and higher wages. This column presents the first systematic review of 102 experimental interventions comprising a total of 652 estimated impacts. It finds that programmes are more likely to yield positive results when GDP growth is higher and unemployment lower, and that programmes aimed at building human capital show significant positive impact.

El-Erian: Fed and ECB Bend to Markets Ahead of EconomyBB
Central bankers are determined to loosen monetary policy despite questions about effectiveness and risks.

Rick Rieder: The monetary policy endgameBlackRock
The economic policy state-of-play today, and where it may lead to should economic growth falter, productivity not materialize, and populism continue to thrive.

Elga Bartsch: Why central banks are running out of ammoBlackRock
How conventional and unconventional monetary policy space is limited and rapidly being used up even before central banks respond to the next downturn, let alone a full-blown recession.

Syyskuun talouskatsaus: Epävarmuus varjostaa yhä talouden näkymiäSuomen Pankki
Suomen vientimarkkinoiden kasvu on hidastumassa varsinkin euroalueella, ja epävarmuus maailmantaloudessa jatkuu. Myös asuntorakentaminen on hiljenemässä, eikä tue investointien kasvua entiseen tapaan. Työllisyyden kasvu ja palkankorotukset ovat tukeneet ostovoiman kasvua, mutta kuluttajien luottamus Suomen talouteen vajoaa. Indikaattorimallien mukaan Suomen talouskasvu onkin pysähtymässä kolmannella vuosineljänneksellä. Työllisyyden kasvu hyytyi jo kesän aikana.

Suomen Pankin maine pehmeneePeter Nyberg

Täältä tullaan, taantuma ja taantumus!Henri Alakylä