Is the next US downturn years away, or just around the corner? Either way, leading US economist, Professor Jeffrey Frankel, says it will be severe. And the reason, he says, is the Trump administration’s relentless pursuit of fiscal expansion and financial deregulation. Show More
With tectonic plates shifting under the markets, we got in touch with three leading economists to get their number one chart in markets today. First up, Cameron Kusher, Principal at CoreLogic, tells us what the market’s been missing in residential housing. Next, Alex Joiner, Chief Economist at IFM Investors, looks... Show More
Over the past 18 months, the term ‘Goldilocks’ has increasingly been used to describe the global economic climate – neither too ‘hot’ to cause rampant inflation, nor too ‘cold’ to fall into recession. In such an environment, interest rates can remain low. This happy set of circumstances has been positive... Show More
This week it's wage inflation, but with a particular twist. Utilizing the great indicators from the innovative economics team at the Atlanta Fed, I have built a new indicator which I call the "Stay or Go Indicator". It is the difference between the annual wage growth figures for 'Job Switchers'... Show More
2017 saw a combination of solid economic growth without a significant pick-up in inflation. This let the Fed continue to raise rates, but at a measured pace, and it has flagged it’s likely to raise rates another three times this year. Other major central banks did not follow this path... Show More
I spent a lot of time in the 2017 End of Year Special Edition looking back across the year, covering some of my best charts and calls (and some of the worst!). But this article provides a look at the most important part of that report. Show More
Each week we produce a topical piece on what economic factors are driving the markets in Australia. Our senior economist Stephen Roberts also produces a podcast where he discusses these topics in greater detail. You can listen to Steve's dulcet tones HERE. Show More
We are changing our view of Australia’s interest rate outlook essentially pushing out by six months the first RBA cash rate hike to August 2018 from February previously. The main reason why we are changing our rate forecasts is that it looks as if it may take longer for local... Show More
Last week we referred to international forecasting agencies and several central banks starting to consider that inflation may make a cyclical come-back over the next year or two. Yet in Australia most forecasters still see only slow and modest lift in local inflation at most over the next two years.... Show More
At the latest combined meeting of the IMF and World Bank the heads of the world’s major central banks seemed close to agreeing that the global economic recovery is entrenched and that inflation is unlikely to stay low for much longer. It was the clearest warning so far that the... Show More
Australian households are on average better off than they have ever been mostly because of the large increases in household wealth over recent years and a low unemployment rate closing in on what might be considered the “full-employment” unemployment rate. Yet in this age of comparative plenty the household sector... Show More
Capitalism works because companies are free to enter and leave businesses. Labour is also free to move from one activity to another. Returns on capital, human and physical, are then mean reverting in that more competition and capital enter attractive businesses and vice versa. The modern version involves government regulation... Show More
The Bank of Canada hiked interest rates another 25bps to 1.00% today, surprising most. As noted last time (following the July interest rate hike) Canada's housing market is running hot, and has all the hallmarks of a property price bubble. Show More
As global rates start to rise, Australia may follow in the short-term, but structural issues will prevent the RBA from hiking rates far, explains Chris Watling, CEO of Longview Economics. Any rate-hikes from the RBA will be short-lived, he says, and those structural issues will force Australian rates to zero. Show More
One of most reliable early warning indicators of an impending equity bear market is the shape of the US yield curve. When short-term interest rates are higher than long bond yields, it is a sign that monetary policy is tight enough to choke off growth in the economy and company... Show More
The first half of FY2017 has certainly delivered some unexpected outcomes - Donald Trump's election as the 45th President of the United States and the following positive market reaction stunned the world. Amidst the resulting volatility in bond and equity markets lies a wealth of opportunity for those who care... Show More
The below chart appeared in the latest edition of the Weekly Macro Themes http://www.topdowncharts.com/single-post/2016/11/25/Weekly-Macro-Themes---25-November-2016 and shows the well known US Dollar Index (or DXY) vs the average 10-year government bond yield differential across the G10 currencies. There appears to be a pretty clear relationship between the interest differential indicator and... Show More
September was a reasonably volatile month as the markets had to digest key meetings from the ECB, BOJ & Fed and deal with a renewed focus on the viability of Deutsche Bank, after the US Department of Justice (DOJ) put forward their opening bid on the mortgage-securities cases fines. The... Show More
Fiscal spending will top the agenda in Q4 for global investors, says Saxo Bank Group’s head of macro analysis Christopher Dembik. So where are the opportunities? Interest rates are at a low level, he says, so governments have a great chance to invest further to boost economic activity. China has... Show More
In an age where political correctness runs rampant, we are all having to be exceedingly conscious about how the things we say and words we use affect others. This is undoubtedly a good thing, but have we gone too far when our elected representatives are muzzled to stand up and... Show More