In
2020 we envision a sluggish path of recovery for the manufacturing sector,
supported by receding drag from the car and pharma sector and an upturn in the
Chinese manufacturing cycle. That said, event risk remains high, as the recent
escalation in the EU-US tariff dispute over illegal Airbus subsidies has shown.
Further US tariff escalations - be it with Europe or China - as well as a
chaotic No-deal Brexit remain prominent downside risks.
Eurozone:
BICC deal is not a big deal – ING
Eurozone
finance ministers reached a deal this week on the details of a budgetary
instrument for the Eurozone. What started as an ambitious plan for a common
budget to solidify the Monetary Union ended in a tiny fund aimed at structural
reform
Deutsche
Bank Is Only Part of Germany's Misery – BB
The
country needs to sort out its entire banking system. A merger of Helaba and
Deka won’t get it there, neither will a bailout of NordLB.
POLITICS
Europe
Needs a Serious Nuclear-Energy Debate – Project
Syndicate
Sadly,
the primacy of anti-nuclear sentiment over empirical fact has been a consistent
feature of Europe’s nuclear-power debate since the 1980s. And the alarmist
rhetoric surrounding today’s emerging nuclear technology is yet another example
of this contradictory and self-defeating approach.
A
Refugee Invasion of Europe? Erdogan Is Bluffing – BB
Turkey
isn’t the continent’s gatekeeper, and it has too much to lose by angering the
EU.
Poland
election: the unfinished counter-revolution – FT
The
Law and Justice party has overseen growth while mobilising voters who feel left
behind
EUROPEAN CENTRAL BANK
Draghi
Leaves a Toxic ECB Legacy for Bankers – BB
The
ECB president deserves all the plaudits for saving the euro, but the “doom
loop” between large banks and sovereign debt hasn’t gone away.
Germany
Versus the ECB
– Project
Syndicate
With
the German economy close to recession, ECB’s Draghi has rightly urged eurozone
governments to provide more fiscal stimulus. And acknowledging the interaction
between fiscal and monetary policy would leave critics much less room for
ECB-bashing.
Christine
Lagarde Has a German Problem – BB
The
hardest job for the ECB’s incoming boss will be explaining to Germany why it
should back monetary - and fiscal - stimulus.
UNITED STATES
FEDERAL RESERVE
Federal
Reserve to buy $60bn of Treasury bills per month – FT
Size
of operation shocks Wall Street analysts who expected more conservative
approach
Fed’s
Plan to Buy Treasury Bills Could Be an Expensive Ordeal – BB
Bank
to buy $60 billion of 5- to 52-week securities per month * Short-term investors
may be reluctant to part with securities
Fed
to Start Buying $60 Billion of Treasury Bills a Month From Oct. 15 – BB
Purchases
to start Oct. 15, continue at least into 2nd quarter * Fed stresses that
purchases do not represent policy easing
10-Year
Yield Jumps, Yield Curve Steepens on Fed’s plan – Wolf
Street
Ending
the repo market blowout and un-inverting the yield curve.
QE-lite,
or QE-not?
– ABN
AMRO
Fed
View: Powell is right when he says this is not QE * Why do banks prefer holding
cash to Treasuries? * Expect $150-200bn boost, followed by organic growth
Fed’s
inflation discussion
– ING
There
is a lot of discussion about how, or indeed whether to change the Fed's
inflation target - much of this leans in exactly the wrong direction.
From
QE to QT to "new normal" – Nordea
In
this macro theme, we try to dig into the "hot topics" of i) whether
the Fed is re-starting QE ii) how the composition of the Fed’s balance sheet
works iii) how much liquidity injection the Fed will deliver and iv) what are
the market implications.
OTHER
Krugman:
What Economists (Including Me) Got Wrong About Globalization – BB
The
models that scholars used to measure the impact of exports from developing
countries in the 1990s underestimated the effect on jobs and inequality.
Is
Rural Pain Really at the Heart of Populism? – BB
Regional
differences account for only 5% of disposable income inequality.
MMT
isn’t helicopter drops – Scott Sumner
More
protracted slowdown
– ABN
AMRO
Spreading
slowdown from industry to services points to ongoing weak growth * US-China
Trade War: Piecemeal deal possible, but the big picture remains grim
Joseph
E. Stiglitz: No More Half-Measures on Corporate Taxes – Project
Syndicate
In
the face of climate change, rising inequality, and other global crises,
governments are losing out on hundreds of billions of dollars in tax revenue as
a result of corporate tax arbitrage. Yet despite the obvious deficiencies of
the global tax regime, policymakers continue to propose only piecemeal fixes.
Unconventional
monetary policy tools: a cross-country analysis – BIS
UMPTs
helped the central banks that used them address the circumstances presented by
the crisis and the ensuing economic downturn. It identifies side effects, such
as dis-incentives to private sector deleveraging and spillovers to other
countries, but does not consider them sufficiently strong to reverse the
benefits of UMPTs.
Fiscal
Monitor: How to Mitigate Climate Change – IMF
On
the design of fiscal policies for climate mitigation at the domestic and
international level.
World
Economic Outlook Analytical Chapters – IMF
Closer
Together or Further Apart? Subnational Regional Disparities and Adjustment in
Advanced Economies * Reigniting Growth
in Emerging Market and Low-Income Economies: What Role for Structural Reforms?
TRADE WAR
US
agrees limited trade deal with China – FT
‘Substantial
phase one’ agreement offers some US tariff relief for limited Chinese
concessions
US-China
Trade: 'Phase 1' deal not a game-changer – Danske
Bank
The
completion of 'phase one' of the trade deal could likely boost market
confidence further near-term as it removes some uncertainty, but it will not be
a game changer for the global economy in our view. Although negotiations of
'phase two' are expected to commence in November, we still think there are
significant hurdles for a more comprehensive deal.
Xi
Upstages Trump With a Chinese Welcome Mat – BB
The
timetable to remove foreign ownership caps on financial firms shows Beijing is
moving ahead with its Plan B.
FINNISH
Eriarvoisuus kasvussa? – Akateeminen talousblogi
Analyysi: Valtioneuvosto tutki vihapuhetta sadallatuhannella eurolla, mitä
jäi käteen? – Suomen
Uutiset
IMF:n ratkaisu ilmastokriisiin: Hinta on 70 euroa, toimii ja tulee halvaksi – TE
IMF: n uusi
raportti ratkaisee ilmastonmuutoksen yhdellä keinolla. Jos hiilipäästöille
laitetaan 70 euron tonnihinta, polttoaineiden hinta pomppaa, mutta terveyden
paraneminen tuo jättisäästöt.