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Business & Geopolitics ENG GCC MENA ENG

Business & Geopolitics: The Abraham Accord and the future of the Middle East

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Commodities ENG Market focus ENG Oil

Oil Market Monthly Review: Sept. 2020

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Business & Geopolitics China ENG Future of Money

Future of Money: An update on China’s Digital Yuan Project

Known as the Digital Currency Electronic Payment (DC/EP), the CBDC (Central Bank Digital Currency) project piloted by the People’s Bank of China is so far the most advanced projet of its kind in the world. The introduction of a CBDC in the world’s most populous country and second largest economy may have far reaching consequences.

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China ENG Macro Flash

Macro Flash: Surveys show China’s recovery is strong but uneven

The released Official China NBS/CFLP PMI and the Caixin/IHS Markit PMI for August showed both that the Chinese economy was undergoing a robust growth recovery in August. However, the Official PMI shows that the economic recovery is uneven and is driven first and foremost by large manufacturing enterprises and by the construction sector., which benefited the most from the fiscal and monetary stimulus measures. Export orders continued their recovery initiated in June but the major driver of growth was domestic demand. Employment remained muted as companies still face uncertainties related to the COVI19 pandemic and its impact on economies across the world. Expectations remain anchored at a high level, although they edged lower compared to July and June.

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ENG Eurozone Macro Flash

Macro Flash: Eurozone recovery slowing down in August

The pace of recovery of the Eurozone economy following its sharp contraction in 2Q 2020 slowed down significantly in August. The Eurozone PMI Composite Index came up at 51.9, still largely in positive territory but significantly down from the 54.9 level reached in July. The Manufacturing Index remained on a healthy recovery trajectory thanks to the strong rebound observed in Germany (cf. our Macro Flash on German Manufacturing PMI) and despite the stagnation observed in France. However, the Services headline index came almost flat at 50.5, due to a marked growth slowdown in France and a return to contraction in Italy and Spain. Regardless of the softness observed in the Services sector, Confidence about the future continued to peak up reaching its highest level in two years. This confidence will need to be supported by additional monetary and fiscal stimulus, else it could fade out. Indeed, Eurozone inflation moved into negative territory for the first since 2016 and unemployment continued to grow across the Eurozone which bodes ill for domestic demand, especially given the record savings growth due to precautionary motives.

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ENG Macro Flash

Macro Flash: A fork-shaped recovery for the US Job market

The BLS Employment Situation Report for August showed that the US job market continued to recover from the impact of the COVID19 pandemic with the unemployment rate for August, as measured in the household survey, declining by 1.8 percentage points to reach 8.4%, which is still above by 4.9 percentage points over its pre-crisis level but much better than the Consensus estimate of 9.8%. The number of unemployed persons fell by 2.8 million to 13.6 million. For its part, the establishment survey showed that 1.4 million non farm payrolls were added during the month bringing the number of total employed persons in the United States to 147.4 million of which 122.4 million were full time employed and 25.0 million were part time employed. However out of these 1.4 million additional recorded payrolls, employment in government increased by 344,000 in August, accounting for one quarter of the monthly gain and reflecting the hiring of 238,000 temporary 2020 Census workers. The US labor market is going through a fork-shaped recovery with two very distinct legs as we explain in this analysis.

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ENG Eurozone Macro Flash Switzerland United Kingdom

Macro Flash: Jobless recovery for the German industry

The final German Manufacturing PMI for August was up at 52.2 from July’s final 49.0. The figure was less upbeat than originally thought as it came 0.8 points below its earlier published Flash estimate. The New Orders improved sharply at 59.1 alongside Future Output (Expectations) at 60.8. However, some weaknesses remain as factory jobs were cut again although the rate of job shedding was the weakest in five months. This indicates that a reversal could happen as the initial Business output and confidence upturn observed in July-August comes following a plunge in manufacturing activity in 2Q 2020. The mechanical “rise from the abyss” effect may fade out in the coming months and the recovery may peter out if the underlying drivers of growth – i.e. domestic demand and external demand – do not live up to their current expectations.

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ENG Macro Focus ENG

Macro Focus: Impact of COVID-19 on E-Commerce sales

The Census Bureau of the US Department of Commerce announced on August 18 that U.S. retail e-commerce sales for the second quarter of 2020, adjusted for seasonal variation, was $211.5 billion, an increase of 31.8 percent from the first quarter of 2020.

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Central Bank Watch ENG Macro Focus ENG

Macro Focus: What if the FED decided to go NIRP?

The Federal Reserve has so far resisted the general compulsion to implement negative interest rates among the world’s major advanced central banks. Fed Chairman Jerome Powell has repeatedly insisted that the Fed is not considering a negative interest rates policy (NIRP). But what if there is a sudden policy turnaround? Beyond what it has already done, the Fed has quite a limited number of policy options it might consider to prop up the US economy and foster its recovery from the Great Virus Crisis. As prominent economists like Kenneth Rogoff convincingly argue, NIRP might be the most efficient option at the Fed’s disposal. A turnaround on this issue is far from granted, but were it to happen it would usher a new era with tremendous economic, financial and geopolitical consequences for the world.

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Business & Geopolitics ENG

Business & Geopolitics: Antitrust Policies for the Digital Age

The hearing in front of the US Sentate of the CEOs of four out of five of the largest US Tech companies may announce a rejuvenation of Antitrust laws and policies in the United States. If the report expected later this month is followed by legislative action, this would bring back these laws and policies closer to their original philosophy. But their application to Internet Platforms is likely to yield significantly different outcomes compared with earlier high profile cases.