Chastened ECB Wary of Premature Monetary Tightening
Cyclical indicators have improved, but the economic and financial backdrop in the euro area remains fragile. The ECB has clearly learned from past mistakes and is keen to avoid a premature tightening of monetary conditions.
read moreUK Threat to Exit EU: Much Ado About Nothing
In a speech last week, British Prime Minister David Cameron raised the possibility that the UK might push the “nuclear button” and leave the European Union. We think both the threat and consequences of such a move have been exaggerated.
read moreEquities Set to Break Out of the Bear Trap
In the face of significant uncertainties, US and global equities rallied in 2012 and at the start of the New Year. We think there might be more to come as stocks break out of the bear trap.
read moreIs the Euro “Dangerously High”?
Jean-Claude Juncker’s view that the euro is “dangerously high” isn’t shared by the European Central Bank (ECB). As long as this is the case, the single currency may continue to defy fundamentals and act as an unwelcome headwind for an economy still struggling to break out of recession.
read moreUK Economic Quagmire Adds Pressure for Monetary Policy Change
Bank of England governor-elect, Mark Carney, has raised hopes that the central bank may soon switch to a nominal GDP target. In our view, the costs outweigh the benefits, but the attractions of a radical new approach will grow if the economy remains stuck in the doldrums.
read morePay Attention to Pricing Power in 2013
Revisions to earnings forecasts started to improve in late 2012 as analysts’ worst macroeconomic fears eased. But this year, global companies may find it tougher to boost profits while their pricing power remains weak.
read moreWho’s Afraid of the Fiscal Cliff?
Warnings about the fiscal cliff have saturated the US public debate. But consumers are still spending, even though they face huge potential tax hikes, while companies are being very cautious—even though they have relatively little to lose.
read moreGreece Still Needs a Long-Term Growth Plan
Even by the standards of the sovereign-debt crisis, the provisional agreement reached yesterday by euro-area finance ministers and the International Monetary Fund (IMF) on a second Greek rescue package looks like a messy fudge. It is clear that Greece’s euro-area partners are determined to avoid a near-term euro-area exit, but a long-term solution will require [...]
read moreThere’s New Hope for US Recovery as Early Cyclical Sectors Rebound
Something is changing in the US economic recovery. Housing and autos are finally starting to wake up from a recession-induced slumber, and the timing couldn’t be better.
read moreDoes an Odd Economic Tidbit Reveal Surging Optimism?
The Philadelphia Fed Index, a leading measure of US economic activity, beat analysts’ expectations. But what caught our eye—and many others’ as well—was a detail within the survey: the future index jumped more sharply than it has since February 1991, when the first Gulf War ended unexpectedly quickly.
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