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It’s Europe with the Recession Risk, Not the US (2 min read)

By Bilal Hafeez | August 21, 2019

Despite all the talk of an imminent US recession, most estimates suggest US growth is comfortably in the 2% zone. Nowcast estimates have Q3 GDP growth ranging from 1.8% to 2.6%, and the consensus  forecast has it at 1.8% (see

Can Fed turn bonds yields at Jackson Hole? (3 min read)

By Bilal Hafeez | August 15, 2019

Bond yields across the world are falling to record lows. US 30 year treasury yields are at their all-time lows and flirting with the 2% threshold, German 10-year government yields have crossed below -0.6%, and remarkably, Spanish 10y yields are

Don’t cry for me Argentina…again? (2 min read)

By Miguel Ovalle | August 15, 2019

Apparently, the 25% correction in the ARS vs. the USD that we were expecting by the beginning of the week was not enough for the markets as some analysts and investors are now anticipating a first round victory for the Fernandez-Fernandez formula. The Argentine peso has lost approximately 40% in

Best of the Web

Perspectives on U.S. Monetary Policy Tools and Instruments

May 13, 2019

“ The fed funds rate today is essentially an administered rate that is heavily influenced by regulatory arbitrage and divorced from its traditional role as a signal of liquidity in the banking system. The size of the Fed’s balance sheet

Improving Labor Force Participation

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Between 2015 and 2019, the labor force participation (LFP) rate among US prime-age workers (25 – 54 years old) increased by about 1.5 percentage points, adding about 2 million workers more than if the participation rate had not increased. For

Germany, Startups, and Inflation

May 7, 2019

Some useful perspectives on Germany. Here’s an excerpt: ” Foreign drivers in Germany are often excited about the unchecked speed limits on the Autobahn. But in my rental car, I was most surprised by the well-controlled traffic within cities. Unlike in

China Digest from the Web

Smart home tech makes inroads into China’s emerging elderly care market (Reuters, 4 min read)

August 16, 2019

(You can read the article by clicking here) China, similarly to Japan and many Western countries, has an aging population and start-ups are waking up to huge market potential. With millennials too busy to look after their parents and retirement

Inside China’s vast influence network – how it works, and its reach in Australia (The Conversation, 4 min read)

August 16, 2019

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Podcasts

Danny Blanchflower Discusses Labor Economics (Masters in Business, 75 mins)

August 21, 2019

(You can listen to the podcast by clicking here) Danny Blanchflower, former Bank of England MPC member attempts to decipher the puzzle of muted wage growth despite unemployment nearing its natural rate. He states that income inequality disincentivizes the working

He Begs to Differ (Grant’s Current Yield Podcast, 22 mins)

August 21, 2019

(You can listen to the podcast by clicking here) Tuomas Malinen, CEO of GnS Economics and an Adjunct Professor of Economics at the University of Helsinki argues that an extremely low-interest-rate environment and QE don’t work as intended (in an

Kashmir Is the 72-Year ‘Wound’ between India and Pakistan (Deep Dish on Global Affairs, 29 mins)

August 21, 2019

(You can listen to the podcast by clicking here) We recently observed Prime Minister Modi and his government’s historic announcement to alter the Indian Constitution and diminish Kashmir’s autonomy. In this podcast, Nisid Hajari from Bloomberg and academic Paul Stainland analyse

Freshly Squeezed Working Papers

Alternative Data to Generate Alpha (3 min read)

June 20, 2019

In recent years the availability of new alternative datasets for financial markets has expanded enormously, potentially giving investors an informational edge. These can range from consumer transaction data to satellite

Give Credit Where Credit Is Due: What Explains Corporate Bond Returns?

May 21, 2019

Give Credit Where Credit Is Due: What Explains Corporate Bond Returns? AQR paper finds finds that options markets explain a great deal of credit returns. Two features of corporate bonds

The Risk of Returning to the Zero Lower Bound

May 21, 2019

The Risk of Returning to the Zero Lower Bound San Fran Fed writes “that there currently appears to be a low risk of the economy returning to the zero lower bound

Investor Positioning

August 20, 2019

It’s Europe with the Recession Risk, Not the US (2 min read)

August 21, 2019

Despite all the talk of an imminent US recession, most estimates suggest US growth is comfortably in the 2% zone. Nowcast estimates have Q3 GDP growth ranging from 1.8% to 2.6%, and the consensus  forecast has it at 1.8% (see table). This follows the 2.1% print for Q2. On top of that, growth data surprises have been turning up for the US (second chart).

The picture for Europe is less positive: both the UK and Germany saw negative prints for Q2. And data surprises at least for the Euro-area have been heading down. So if there is vulnerability in the global economy, it appears to be showing up in Europe rather than the US.

Nowcasting estimates for US growth (q/q ar)

11

Growth data surprises

222

Bilal Hafeez is the Editor of Macro Hive and can be contacted here

 

(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)

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