Tag Archives: Macroview

Both the ISM Manufacturing index and its Non-Manufacturing counterpart rose m-o-m in March. However, other economic data recently published were rather weak. Our forecast that GDP will grow by 2.0% in Q1 is revised down to 1.5%. However, our forecast for yearly average growth in 2016 remains unchanged at 2.0%. The ISM Manufacturing survey for March 2016 was published on Friday last week. The headline reading bounced back further from 49.5 in February to an eight-month high of 51.8 in...

Macroview Growth vs. value has been an important theme in long/short hedge fund portfolios--and a recent source of pain for some and profit for others owing to trend reversals this year. Amid slowing growth worldwide, growth stocks have outperformed value both in the US and Europe in the past decade and have been a profitable bet in long/short managers' books. There are some inherent differences in what value stocks represent in the two regions. Looking at the composition of the MSCI US...

Headline inflation was negative for the second consecutive month in March, but core inflation rose above consensus. We expect underlying inflation dynamics will remain subdued this year and it will take time to judge the effectiveness of the ECB's latest easing measures. According to Eurostat’s preliminary estimate, the euro area harmonised index of consumer prices (HICP) inflation rose to -0.08% y-o-y in March from -0.15% y-o-y in February, in line with consensus expectations. The March...

Strong money-supply growth in February enables us to maintain our forecast for euro area real GDP growth unchanged at 1.8% in 2016. Euro area bank credit flows increased again in February, in line with other indicators such as the ECB’s Bank Lending Survey (see the chart below) and quite remarkably given the challenging financial context in February. We continue to believe that the credit cycle has legs. Moreover, we expect the ECB’s new Targeted Long Term Refinancing Operations (TLTRO...

From a low point of less than $30 per barrel in mid-February, oil prices had risen to over $40 by mid-March. If maintained, this rise will have an obvious impact on growth and inflation on both sides of the Atlantic. The use of a sophisticated macro-econometric model provides an insight into just how large the impact might be. Although oil prices have risen, the huge accumulation of oil stocks as a result of overproduction should serve as a brake on oil prices this year and next....

We think some of the ECB’s critics are missing the point. In particular, we expect TLTRO II to lower bank funding costs, mitigate the adverse consequences of low (negative) rates on bank margins, strengthen the ECB’s forward guidance and improve the transmission of monetary policy. We expect the take-up at all four TLTRO II operations to exceed EUR500bn, of which roughly EUR400bn should be rolled over from TLTRO I. The resulting reduction in terms of the cost of negative rates could be...

Hard activity data for the euro area have improved since January, but downside risks still dominate despite the ECB’s support. At the very least, monetary policy looks set to remain exceptionally accommodative for an extended period of time. Euro area business surveys (PMIs and IFO) showed renewed signs of life in March after the drops seen in the first two months of the year. Surveys also highlighted the contrasting trend between the manufacturing sector, dented by a subdued external...

The FOMC sounded quite cautious and surprised at its meeting yesterday as it markedly revised down its Fed funds rate median projection for the end of this year. As widely expected, at yesterday’s FOMC meeting, the Fed chose to ‘stand pat’. Although yesterday's FOMC meeting was perceived as sounding ‘dovish’ and Fed funds rate projections were cut, the Fed still expects to hike at least twice this year. On our side, we continue to look for two rate hikes this year, the first probably in...

At its quarterly policy assessment, the Swiss National Bank (SNB) decided to leave its monetary policy unchanged. The SNB could afford not to cut its reference rate after last week’s ECB stimulus failed to have much impact on the Swiss franc versus the euro. The target range for the 3-month Libor was kept between -1.25% and  -0.25%; the interest rate on sight deposits with the SNB was maintained at a record low of -0.75%; and the SNB reiterated its willingness to intervene on the foreign...

Today’s retail sales report was a clear disappointment, particularly at the core level. However, we continue to expect solid consumption growth in Q1 and overall in 2016. Nominal total retail sales dropped by 0.1% m-o-m in February, slightly above consensus expectations (-0.2%). However, January’s number was revised down markedly from +0.2% to -0.4%. Total sales were dented by a 4.4% m-o-m fall in nominal sales at gasoline stations (on the back of sharply lower gasoline prices). Nominal...