EUROPE
Trade
within eurozone falls at fastest pace in six years – FT
Slowdown
raises fears US-China dispute is hurting exporters
Euro
area industrial production falls – Eurostat
-1.6%
from month ago, -2.6% from year ago
Bershidsky:
Moscow Protests Are Getting More Dangerous – for Putin – BB
Now,
the unrest is directed against disproportionate police violence, and that makes
it more dangerous for the Kremlin.
Lost
in Trump’s China Week Was a Postcard to Europe: You’re Next – BB
Decision
to be made within months on possible auto tariffs * Revisiting grievances
before next weekend’s G-7 summit
Ashworth:
Switzerland Is Held Captive By Its Big Neighbor – BB
With
the ECB set to cut rates, the Swiss will have little choice but to go even
deeper into negative territory. The SNB is a price-taker, not a price-maker.
ECB:
Mitigating side effects - gauging the tiering premium – Danske
Bank
An
ECB tiering system is widely expected to be announced at the ECB September
meeting. However, the exact design and ultimately the market impact are
difficult to assess. In this document, we lay out our views on how a tiering
system could be constructed.
ITALY
Italy:
Back to polls in Q4 2019? – Pictet
Recent
developments in Italy’s political landscape have increased the probability of
early elections in Q4 2019, but the situation is not so straightforward.
Cowen:
Italy’s Economic Rot Is Europe’s Problem, Too – BB
Two
decades of nearly nonexistent growth is hurting both the country and the
continent.
GERMANY
Germany:
On the brink of recession – Nordea
The
German economy contracted in Q2 and the weak sentiment data suggest negative
growth continued in Q3 as well, which would put the German economy in a
recession. The outlook for the German economy is worrying.
Germany
heading for recession
– ABN
AMRO
German
GDP fell in 2019Q2 and Q3 numbers point to a contraction as well * The industry
recession is intensifying and domestic demand is slowing down * We expect the
German economy to be weaker than the eurozone, which should be close to
stagnation in 2019H2 but not in recession
The
case for fiscal stimulus strengthens in Germany – Pictet
German
real GDP shrank in the second half of the year, reinforcing our view of a
significant ECB action in September.
Bershidsky:
Germany Needs a Recession to Start Spending – BB
The
pressure on Angela Merkel to give up the zero deficit policy is mounting as the
economy weakens, but she will wait before turning on the spending taps.
UNITED
STATES
Offshoring
and the decline in US manufacturing employment – voxeu
What
has caused the rapid decline in US manufacturing employment in recent decades?
This column uses novel data to investigate the role of US multinationals and
finds that they were a key driver behind the job losses. Insights from a
theoretical framework imply that a reduction in the costs of foreign sourcing
led firms to increase offshoring, and to shed labour.
FEDERAL RESERVE
US:
The self-fulfilling threat of an inverted yield curve – ING
The
market is worried about a recession. For now we don't see it, but there is a
chance the fear becomes self-fulfilling
Authers:
The Market Finally Has Its Inversion. Now What? – BB
The
latest move in the bond market is unlike anything investors have seen, and not
in a good way.
New
Fed call: Five more from Fed – Danske
Bank
We
now expect five more 25bp cuts, taking the target range to 0.75-1.00% at the
March meeting. We do not anticipate the Fed will pre-commit to more easing but
that it will stick to its current ad hoc approach. If the Fed really wants to
reflate the economy and markets, it may need to commit more to easing and/or
cut more and faster eventually.
Duy:
The Federal Reserve Can Conquer the Yield Curve – BB
Unlike
in the past, the central bank hasn’t waited to see signs of a recession in the
data before lowering interest rates.
OTHER
FX:
what usually happens after US curve inversions? – Nordea
The
US 2/10 curve has recently traded briefly in inverted territory. While the past
is not necessarily a perfect guide for the future, we looked into the details
on what usually happens in the G10 and EM spaces following an inversion of the
US curve.
New
monetary policies for new challenges – Pictet
As
central banks try (yet again) to bolster faltering growth and inflation, it is
important to grasp how the ‘style’ and aims of monetary policy-making have
changed over time and how they need to evolve in the future.
Monetary
policy – automatic for the people? – Jussi
Lindgren
Chappatta:
The Bond Markets Are Begging for Infrastructure Spending – BB
Government-financed
public works projects could end the plague of negative-yielding debt.
International
business cycle co-movement in the global production network – voxeu
The
international co-movements of business cycles is a key determinant of trade and
monetary policy, but the ways in which it is affected by technology, TFP, and
trade openness are not fully understood. This column shows how such
co-movements are affected by trade linkages and technology. It finds that
non-technology shocks contribute more to international co-movement than TFP
shocks, and that transmission plays a notable but small part in co-movements.