e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268;;[{"layout":"linklist","uid":27043,"publicationDate":"20 Jan 10:58","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182193.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIFZnSTSFyJEe8oANl5JixQ=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182223.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJARrg0KZdE9OTB26qeCDbpM=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182227.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJARrg0KZdE9OAQIqR2hlyHw=&T=1&T=1"},"title":"Oil Update - Will shale producers come to the rescue? ","product":"Oil Update","synopsis":"<ul class=\"ucrBullets\"><li> Over the last couple of years, the oil industry has sharply cut its planned investment projects worldwide, and this is pushing up oil prices and weighing on the global outlook more broadly.<\/li><li> With oil prices well-above USD 80\/bbl, investing in the drilling and development of new wells is profitable even for the most expensive and least efficient producers. <\/li><li> Thanks to a shorter lead time between drilling and production relative to traditional oil projects, there are early signs that US shale producers might take advantage of their flexibility and react to favorable market conditions by substantially increasing their investment projects. <\/li><li> If this happens, American producers will return to play the role of swing producers, turning their taps on when prices are above their breakeven costs and turning them off when production is no longer economically viable. 2022 has started on a bullish note for the oil market, with Brent prices up more than 10% YTD. The market is discounting the demand losses due to the Omicron variant of COVID-19, which looks more contagious but milder than the Delta variant, while a number of supply outages in Libya, Nigeria, Kazakhstan, the US and Canada are supporting prices in the short term. However, we think it would be a mistake to consider these price moves as vindication of oil super-cycle arguments, which are rooted on the assumption of burgeoning demand outpacing supply. First, current supply disruptions are temporary hiccups that will be reabsorbed soon. Second, and looking at the big picture, oil prices were supported in 2021 not by strong demand but by supply being kept artificially low by OPEC+. At the end of 2021, world spare capacity was 2mb\/d above its 2010-19 level, largely driven by the OPEC+ curbs. As we have argued several times in previous issues of our Oil Update, the oil market is at a turning point in early 2022 ' shifting from a situation of under-supply to one of over-supply as demand gradually stabilizes and the OPEC+ tapering is completed. In turn, oil prices should start to decline, thus easing pressure on central banks to act aggressively in order to counter rising inflation. In addition, as a recent survey by the Dallas Fed points out, US shale producers could come to the rescue by taking advantage of highly favorable prices to boost otherwise sluggish capital expenditure. The revenue losses for oil producers worldwide that were caused by COVID-19, coupled with an acceleration of the green transition worldwide, have weighed on investment in traditional fossil fuels. Oil and gas investment in 2021 was around USD 600bn ' down 20% from about USD\u00a0750bn in 2019. This means that once a well is exhausted there might not be a new one ready to replace it, creating supply shortages and pushing prices higher. Last December, Saudi Arabia\u00b4s energy minister Abdulaziz bin Salman al-Saud stated 'we are set for a period that could be dangerous. If there isn\u00b4t more spending on investments to preserve production capacity and increase it, an energy crisis is coming to the world.' However, after having spent 2021 recovering losses from 2020, shale producers are now likely to take advantage of their shorter lead time between drilling and production relative to traditional oil projects, reacting to favorable market conditions. If this happens, they will return to play the role of swing producers, turning their taps on when prices are above their breakeven costs and turning them off when production is no longer economically viable. Recovering US producersAt the end of 2021, US crude production was around 12mb\/d, still 7% below its 2019 peak but well above the low point of about 9mb\/d that was recorded in May 2019. Chart 1, which reports the rig counts and the number of drilled but uncompleted wells (DUCs), shows that the recovery in production was facilitated by the drawdown of existing wells and not by the discovery of new ones. In order to understand the dynamic, it is important to recognize what it takes to bring an oil well on line. There are essentially two phases. The first is drilling, and it involves dispatching a rig and crew to drill one or more wells on a pad site. The second corresponds to well completion and it is typically performed by a separate crew. It involves casing, cementing, perforating, and hydraulically fracturing the well for production. In general, the time between the drilling and completion stages is some months.If drilling activity grows faster than completion and production, then the inventory of DUCs increases ' creating a sort of spare capacity that can be activated in case of need. Considering that the average life of non-conventional oil wells is around 18 months, with their productivity declining rapidly over this time horizon, DUCs represent an important cushion to adapt to sudden changes in demand. This is what happened between 2016 and 2019, for example. In recent months, instead, the decline in DUCs reflects more well completions and, at the same time, less new well-drilling activity. The completion of wells is increasing oil production, but it is also reducing DUC inventories. After the huge revenue losses recorded in 2020 as a result of mobility restrictions and the price-war between Russia and Saudi Arabia, last year financially-weak shale companies took advantage of the price recovery to pay down debt and to return cash to shareholders through increased dividends and share buybacks. They shifted, in other words, to an investment maintenance mode from an expansion one. The consequence of this conservative approach is underinvestment that risks endangering future production and future cash-flows as companies rapidly activate DUCs to compensate for the declining productivity of existing wells. This is certainly one factor supporting oil prices at the moment. Using a simple linear relationship, based on the DUCs drawdown relative to the rig counts that has been experienced since September 2020, and assuming no additional investment, one can infer that shale producers would need to activate around 3,600 DUCs out of 4,855 to bring production back to its 2019 levels. In other words, DUCs would fall to close to 1,000 ' a critical threshold that has never been reached. Without a swift increase in capital spending, US production is at risk, and so are global output and prices.CHART 1. US OIL HAS NOT RECEVOERED FROM THE PANDEMIC YET<\/li><\/ul>","hash":"e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","synopsislength":"-1","synopsisexpand":"0","nodate":"0","nolinktitle":"0","notitle":"0","dateformat":"d M G:i","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"12"}},{"layout":"linklist","uid":27005,"publicationDate":"16 Jan 13:07","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182144.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIFZnSTSFyJEkDWijiNMbcQ=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182144.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIFZnSTSFyJEkDWijiNMbcQ=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182144.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIFZnSTSFyJEkDWijiNMbcQ=&T=1&T=1"},"title":"Sunday Wrap","product":"Sunday Wrap","synopsis":"<p><ul class=\"ucrBullets\"><li> I\u00b4ll first remind you why inflation is very different in the US than in Europe.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> I\u00b4ll then argue why Dudley\u00b4s piece is so remarkable.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> I\u00b4ll discuss Schnabel\u00b4s speech on green transition and inflation ' and her clarification in the interview Friday night.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> And I\u00b4ll conclude with what it\u00b4ll mean for markets ' and the dilemma the ECB is likely to face in 2022.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":27004,"publicationDate":"14 Jan 16:13","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182143.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIFZnSTSFyJEPfro_RgBt38=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - The Great Resignation: facts and implications","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Anomalies in the recovery of the US labor market persist, clouding both the growth and inflation outlook. Our Chart of the Week shows that both job quits and openings, expressed as a percentage of total employment, remain at historically high levels, with the data points for 2021 (until November) being skewed to the top-right corner of the scatter plot. Since April 2021, around 33mn Americans have left their jobs (around 20% more than over the same timeframe in 2019), equivalent to one in every five workers in just eight months. ADP\u00b4s most recent data show\u00a0high turnover concentrated among 16-to-24-year-olds, with a turnover rate that is almost three times the national average. Understanding what is going on behind the scenes is key to putting into perspective the Great Resignation phenomenon that started last spring. <\/li><li> Quits are employees who left their job voluntarily and it excludes retirements. According to anecdotal evidence, employed workers are not quitting jobs to become unemployed or inactive but rather to switch employers in exchange for better employment terms. Market conditions are especially attractive for these job-to-job moves. After months of restrictions, firms are rushing to rebuild their staff at record pace, but labor supply is not adjusting equally fast, pushing wages higher. At 61.9%, the participation rate is still around 1.5pp below its pre-pandemic level. Some workers are reportedly not rejoining the labor force for fear of infection, caregiving constraints or early retirement (generous unemployment benefits played a role until September). While a tight labor market has both pushed up wages and the incentive to quit in search of better job conditions, rising job-to-job flows have also pushed up wage growth because job movers tend to see larger wage rises than those who remain in the same job. The quits-to-vacancies ratio in November was 0.4, which is lower than the 2001-2019 average of 0.6, meaning that the number of quits is still relatively low compared to the near-record number of job openings.<\/li><li> According to an industry breakdown, above-average quits tend to be concentrated in the sectors hit hardest by the pandemic. The highest quit rate is in accommodation and food services, which has also seen some of the largest wage rises. About 6.9% of people working in hotels, restaurants and bars gave notice in November. This is the highest rate in 20 years. Voluntary turnover in this sector is usually high, given the nature of these services, and has been above 5% several times over the past two decades. Retail trade also posted November\u00b4s second-highest quit rate of 4.4%. Combined, these two low-skill industries, which represent together about 8% of GDP, accounted for one-third of all quits that month. On the other hand, the quit rates in construction, information, finance, insurance and real estate have also risen in recent months, but these remain relatively low ' especially compared to other peaks reached in the past 21 years.<\/li><li> Our view is that the number of quits are likely to ease, as the direct effects of the pandemic ease, labor force participation picks up, job openings are filled and wage growth eases. In addition, the pandemic has led to some sectoral shifts and to changes in workers\u00b4 attitudes towards certain jobs, particularly those that require high social interaction, and this likely partly explains the rise in quits and job openings. Once these adjustments have been made, then quits should normalize too. <\/li><\/ul>"},{"layout":"linklist","uid":26972,"publicationDate":"12 Jan 16:18","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2022_182106.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRovGugTmeT3deYYaT_MxLfNw==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Recovery amid supply-chain and (geo)political risks (1Q22)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect the economies in EU-CEE 1) and in the Western Balkans to grow by around 4.0% in 2022 and by 4.4% in 2023, slowing from 5.1% in 2021. Pent-up consumer demand is expected to drive the recovery in 1H22, while capex and exports could be underpinned by fewer supply-chain disruptions in 2H22 and 2023. Grants and loans from NextGeneration EU (NGEU) will support public investment in 2022-23. <\/li><li> Economic activity in all of these countries will likely return to pre-pandemic levels by the end of 2022, but not to the pre-pandemic growth trend. <\/li><li> In Turkey, we expect economic growth of 4.7% in 2022 and of 4.1% in 2023, although risks to financial stability could undermine the positive effects of rate cuts. <\/li><li> The Russian economy could grow by around 2.2% annually in 2022-23, returning close to potential as household incomes grow at a slower pace and the credit impulse turns negative. Planned transfers from the National Wealth Fund might fuel public investment. <\/li><li> Inflation is likely to miss targets in 2022 as supply shocks could be larger and longer lasting than in Western Europe. Disinflation might be slowed by tight labor markets in Central Europe, where 2023 inflation targets are also threatened. <\/li><li> Policy rates could be increased in 1H22 to 3% in Hungary and Romania, to 3.5% in Poland and to 4.5% in Czechia. The NBS could increase the key rate to 2% before year-end. The NBH, the NBR and the NBS might deliver additional tightening through liquidity management and FX interventions. Only the CNB is expected to cut 25bp before the end of 2022. <\/li><li> Real policy rates could be kept low due to expected fiscal tightening in 2022 and the loss of households\u00b4 purchasing power amid supply shocks. Prudential measures will tighten financial conditions where credit to households continues to rise at a fast pace. <\/li><li> The CBRT and the CBR are likely to cut in 2022, but financial conditions could tighten in Turkey if USD-TRY surges further. We expect the CBR to take the policy rate to 5% by 2023, while, in Turkey, we expect a sharp reversal of rate cuts. <\/li><li> In our view, the main (geo)political risks in 2022 stem from the stand-off between the EU and Hungary and Poland; tight parliamentary elections in Hungary; the migrant crisis at the eastern border of the EU; ethnic tensions in Bosnia-Herzegovina; fragile governing coalitions in Romania, Slovakia, Slovenia and Turkey; potential sanctions on Russia; gas deliveries to Europe and social unrest amid high energy and food prices. 1) EU-CEE refers to CEE countries that are members of the EU: Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia.<\/li><\/ul>"},{"layout":"linklist","uid":26941,"publicationDate":"09 Jan 14:46","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182067.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGgch9_M4sG7YOKCctPY2xQ=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182067.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGgch9_M4sG7YOKCctPY2xQ=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182067.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGgch9_M4sG7YOKCctPY2xQ=&T=1&T=1"},"title":"Sunday Wrap","product":"Sunday Wrap","synopsis":"<ul class=\"ucrBullets\"><li> We start with two global economics risks to the outlook<\/li><li> Then we have six policy themes, worth keeping an eye on<\/li><li> Finally, we have five specific themes for financial markets<\/li><\/ul>"},{"layout":"linklist","uid":26898,"publicationDate":"17 Dec 10:25","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_182020.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJBcmVMUvH8DWq-BkW2dbNqY=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Car price inflation in Germany up as new car sales are down","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> New passenger car registrations in Germany have significantly declined since the beginning of the pandemic and again since July 2021. In contrast, CPI inflation for used cars has rapidly increased since May and for new cars since January. The highest price increases were seen in the medium, small, compact and upper-medium car segments, whereas the smallest price increases have been seen at vans\/small buses, SUVs, sports cars, hybrid cars and natural-gas cars. The drivers behind these sales and car price developments have been 1. the increased importance of individual mobility due to lockdown measures during the pandemic and the resulting higher demand for the small and medium car segments, but also for motor homes; 2. supply chain disruptions, such as the chip and materials shortage, which led to a decline in the production and supply of new cars, emptying car inventories and resulting in long delivery times for new cars; and 3. auto manufacturers focused their reduced production and deliveries on the higher-margin car segments and electrified car segments.<\/li><li> Our Chart of the Week shows a negative correlation between new car registrations and used car prices. This means that used car prices usually decline when demand and registrations for new cars go up, and vice versa. In the crisis period in 2009, for example, the German government supported car sales with scrapping incentives. This led to a significant pull-forward effect, i. e. an increase in new passenger car registrations and at the same time a decline in the prices of used cars as car buyers switched from the purchase of used cars to new cars. Since 2021, the correlation between new car sales and used car prices has been negative again, but there are differences to earlier periods. This time, the government only incentivized purchases of electrified vehicles and not overall car purchases. As a result, the pull-forward impact on overall new registrations was small. In addition, in contrast to the mentioned previous periods, car supply and the offering choice were limited by bottlenecks, which has led to opportunities for auto makers to also raise prices for new cars.<\/li><li> The further development of car prices and sales mainly depends on the normalization of the three factors mentioned above, which are ultimately all pandemic-related. Given that bottlenecks will probably remain elevated in 1H22, global light-vehicle (LV) production and sales are expected to show a recovery from 2H22 at the earliest. As a result of inventory restocking, however, LV production growth is expected to be stronger compared to LV sales growth in 2022, assuming easing chip shortages and supply chain disruptions in 2H22. Such a normalization will likely lead to an increase of new car registrations and a decline in used car prices.<\/li><\/ul>"},{"layout":"linklist","uid":26854,"publicationDate":"12 Dec 12:35","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181963.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJB6dDKN-ZlwQehCMzxDSbIU=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181963.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJB6dDKN-ZlwQehCMzxDSbIU=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181963.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJB6dDKN-ZlwQehCMzxDSbIU=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Sunday Wrap","synopsis":"<ul class=\"ucrBullets\"><li> Our latest forecasts for 2022-2023, published on Friday. We call it \u201cA bumpy road towards normaliza-tion\u201d.<\/li><\/ul><ul class=\"ucrBullets\"><li> The key \u201cbig-picture\u201d risks to this central forecast, both upside and downside ones.<\/li><\/ul>"},{"layout":"linklist","uid":26840,"publicationDate":"10 Dec 11:27","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181953.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJB6dDKN-ZlwQwmzPU8IXdJ8=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_182038.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJBcmVMUvH8DWSidpqkZAj_U=&T=1&T=1","protectedFileLinkIt":""},"title":"UniCredit Macro & Markets - 2022-23 Outlook: A bumpy road towards normalization","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong>Macro: <\/strong> We are lowering our global GDP growth forecast for 2022 to 4.2%, as supply bottlenecks and higher inflation last for longer than anticipated. The US will likely recover its pre-pandemic GDP trend by 4Q22, while the eurozone might get there a year later. Monetary policy will gradually normalize. We expect the Fed to hike rates twice next year and three times in 2023. The ECB\u2019s QE will likely continue at a slower pace into 2023, with no change in policy rates.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>FI: <\/strong> UST yields are likely to drift upwards accompanied by a long-lasting bear-flattening trend. Bund yields should remain low, with the yield curve showing a modest bear-steepening as ECB purchases gradually decline. Pulled by diverging forces, the 10Y BTP-Bund spread will probably trade around 125bp.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>FX: <\/strong> Interest-rate differentials are set to remain the major driver of FX. In G10, we like the USD, GBP, NOK and the commodity currencies against the EUR, JPY, CHF and SEK. New COVID-19 developments may add volatility but are unlikely to prevent EUR-USD from dropping to 1.10 and below.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>Equities: <\/strong> European equities have the potential to grow by about 10% in 2022, mainly supported by solid earnings growth, while volatility may remain elevated over the next few months, as uncertainty surrounding COVID-19, high inflation rates and the policy response of central banks is likely to persist.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong>Credit: <\/strong> We expect European corporate credit spreads will tighten by the end of 2022. Rising inflation, higher yields, supply-chain frictions and pandemic developments are the main challenges but their impact on performance is expected to be contained by supportive technical factors.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":26790,"publicationDate":"05 Dec 12:23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181893.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJH3YumI0qiwD43PEUpXb1b8=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181893.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJH3YumI0qiwD43PEUpXb1b8=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181893.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJH3YumI0qiwD43PEUpXb1b8=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Sunday Wrap","synopsis":"<p><ul class=\"ucrBullets\"><li> A summary of where I think we are heading in European politics. I\u00b4ll argue that we may well be in for a rather profound 'watershed moment', with significant (positive) implications for policies.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> What this means more concretely for fiscal policy in 2022 and beyond ' and hence the room for ECB policies, as we approach the big December 16 decision.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":26789,"publicationDate":"03 Dec 16:45","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181892.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJH3YumI0qiwDeAcliB3gFCw=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - US: Where are the missing workers?","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Today\u00b4s US labor market report for the month of November was mixed. Payrolls rose a disappointing 210k (292k including upward revisions to prior months), while the household survey measure of employment surged 1.1mn. The latter tends to be volatile and is based on a smaller sample, but it\u00b4s the household survey that is used to construct the unemployment rate, which fell a large 0.4pp to 4.2%. While this is confusing and adds to uncertainty, what\u00b4s clear is that labor shortages persist, with the participation rate still 1.5pp (or 2.4mn) below its pre-pandemic level, the employed working much longer hours than pre-pandemic, and average hourly earnings growth rising to almost 5% yoy. The big question for the Fed, who has set 'maximum employment' as one of its pre-conditions for the first rate hike, is how long these shortages might persist and, hence, what is attainable in terms of employment gains in the short term without generating 'excess' inflationary pressure.<\/li><li> Our Chart of the Week shows the gap between the labor force participation rate (that is, the share of the working-age population who are either employed or actively looking for work) compared to pre-pandemic levels, by age group and gender. The fall in participation is concentrated among women, particularly young women, and the over 55s for men. The former likely in part reflects caregiving needs, particularly childcare, while the latter likely reflects early retirement. Other forces weighing on participation include the fear of infection, savings buffers from pandemic-related government transfers, and study. <\/li><\/ul>"},{"layout":"linklist","uid":26734,"publicationDate":"26 Nov 15:37","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181821.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJH3YumI0qiwD5adt_m9vZ3k=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - German households spared from surging gas and electricity bills...for now","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> In its latest monthly report, the Bundesbank forecasts that Germany\u00b4s HICP inflation might reach just under 6% yoy in November (just above 5.5% yoy on the CPI gauge). The preliminary data will be published on Monday. The Bundesbank also expects the inflation rate to decline perceptibly over the course of 2022, although 'the bulk of the major increases in market prices for natural gas will probably only be passed on to consumers after the turn of the year'. <\/li><li> Our Chart of the Week shows that retail prices for natural gas and electricity have remained sticky in Germany despite skyrocketing gas prices in the market. Compared to before the pandemic (we take February 2020 as our reference), Dutch TTF gas prices have recorded a ten-fold rise, while prices for German consumers have barely increased. Germany stands out among its European peers, which have recorded much larger increases in either gas or electricity prices, or both.<\/li><li> At a country level, dynamics in retail prices for energy reflect a complex mix of demand and supply factors. They include the national energy mix, network costs, import diversification, costs for environmental protection, levels of taxation and weather conditions. Lately, government measures to ease the burden on households have played an increasingly important role, for example in countries such as France, Italy and Spain. German consumers have been spared from surging gas and electricity bills until now, largely due to comparatively sticky contractual agreements at the retail level. However, as current contracts expire, higher wholesale gas prices will be passed on to households to a more meaningful extent.<\/li><\/ul>"},{"layout":"linklist","uid":26675,"publicationDate":"21 Nov 13:12","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181739.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAfMw9lWQklME712eYyiXzY=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181739.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAfMw9lWQklME712eYyiXzY=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_181739.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAfMw9lWQklME712eYyiXzY=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Sunday Wrap","synopsis":"<ul class=\"ucrBullets\"><li> I\u00b4ll provide a brief 'literature overview' of where the debate stands. This is mostly a US debate, partly because of the higher US inflation numbers and the greater uncertainty prevailing on that side of the Atlantic.<\/li><li> I\u00b4ll then summarize how I think the Fed and the ECB will react to the uncertainties they face when they meet in three weeks. I\u00b4ll argue that the Fed is likely to lose some of its nerve and accelerate the tightening, if not in December then in (very) early 2022. The ECB won\u00b4t. While complicated due to the politics of the PEPP, the ECB will attempt to keep financing conditions broadly unchanged during most of 2022. (Natural conclusion: EUR\/USD may well move another few big numbers lower.)<\/li><\/ul>"}]

fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128;;[{"layout":"linklist","uid":26972,"publicationDate":"12 Jan 16:18","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2022_182106.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRovGugTmeT3deYYaT_MxLfNw==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Recovery amid supply-chain and (geo)political risks (1Q22)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect the economies in EU-CEE 1) and in the Western Balkans to grow by around 4.0% in 2022 and by 4.4% in 2023, slowing from 5.1% in 2021. Pent-up consumer demand is expected to drive the recovery in 1H22, while capex and exports could be underpinned by fewer supply-chain disruptions in 2H22 and 2023. Grants and loans from NextGeneration EU (NGEU) will support public investment in 2022-23. <\/li><li> Economic activity in all of these countries will likely return to pre-pandemic levels by the end of 2022, but not to the pre-pandemic growth trend. <\/li><li> In Turkey, we expect economic growth of 4.7% in 2022 and of 4.1% in 2023, although risks to financial stability could undermine the positive effects of rate cuts. <\/li><li> The Russian economy could grow by around 2.2% annually in 2022-23, returning close to potential as household incomes grow at a slower pace and the credit impulse turns negative. Planned transfers from the National Wealth Fund might fuel public investment. <\/li><li> Inflation is likely to miss targets in 2022 as supply shocks could be larger and longer lasting than in Western Europe. Disinflation might be slowed by tight labor markets in Central Europe, where 2023 inflation targets are also threatened. <\/li><li> Policy rates could be increased in 1H22 to 3% in Hungary and Romania, to 3.5% in Poland and to 4.5% in Czechia. The NBS could increase the key rate to 2% before year-end. The NBH, the NBR and the NBS might deliver additional tightening through liquidity management and FX interventions. Only the CNB is expected to cut 25bp before the end of 2022. <\/li><li> Real policy rates could be kept low due to expected fiscal tightening in 2022 and the loss of households\u00b4 purchasing power amid supply shocks. Prudential measures will tighten financial conditions where credit to households continues to rise at a fast pace. <\/li><li> The CBRT and the CBR are likely to cut in 2022, but financial conditions could tighten in Turkey if USD-TRY surges further. We expect the CBR to take the policy rate to 5% by 2023, while, in Turkey, we expect a sharp reversal of rate cuts. <\/li><li> In our view, the main (geo)political risks in 2022 stem from the stand-off between the EU and Hungary and Poland; tight parliamentary elections in Hungary; the migrant crisis at the eastern border of the EU; ethnic tensions in Bosnia-Herzegovina; fragile governing coalitions in Romania, Slovakia, Slovenia and Turkey; potential sanctions on Russia; gas deliveries to Europe and social unrest amid high energy and food prices. 1) EU-CEE refers to CEE countries that are members of the EU: Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia.<\/li><\/ul>","hash":"fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]