10 Dec 19: Chart of the Week - Signs of complacency in equity markets are rising

• Our Chart of the Week shows net-short positions in Chicago Board Options Exchange (CBOE) Volatility Index (VIX) futures along with the three-month performance of the S&P 500 (advanced by three months). The amount of net-short positions in the VIX futures recently rose to its highest level since the launch of this instrument in 2004, according to the latest data from the Commodity Futures Trading...

08 Dec 19: Chief Economist´s Comment - Sunday Wrap

• Key features of ESM reform
• Why the political debate in Italy misses the point
• What I regard as the real trade-off implied by the reform

04 Dec 19: Chart of the Week - Past inflation misses are not “bygones” to US households

• Our Chart of the Week shows that, in the US, the trend decline in household long-term inflation expectations has been closely associated with cumulative past inflation “misses” of actual PCE inflation relative to the Fed’s 2% target.* There is real concern that the current inflation-targeting regime – employed by central banks all over the world – where past inflation misses are treated as...

01 Dec 19: Chief Economist´s Comment - Sunday Wrap

• I’ll discuss two concrete examples (within just weeks of each other) of the destructive power of Trump’s approach to multilateralism, and of China’s ambitions to become the new global leader – and I’ll suggest what should be Europe’s response.
• I’ll return to my long-held obsession with investment, today leaving aside the issue of public sector investment, but rather use the just released 2019...

24 Nov 19: Chief Economist´s Comment - Sunday Wrap

• Christine Lagarde’s maiden policy speech as ECB president on Friday. I thought it was excellent, containing more insight into her thinking than what I read in the media afterwards.
• The outlook for the global economy and markets in 2020 and 2021, benefitting from the collective input from my entire economics and strategy teams. I’ll summarize our just published annual piece, which we titled...

17 Nov 19: Chief Economist´s Comment - Sunday Wrap

• Banking union and the confusion about banks’ sovereign exposure.
• Elon Musk’ announcement on Tuesday that he has picked Berlin as the location for Tesla’s European production and design center, and what that tells you about cars, Germany and other things…

15 Nov 19: Chart of the Week - UK Election: History predicts a Conservative win

• Our Chart of the Week shows that the Conservative party is likely to win the most seats at the 12 December general election and, in our view, an overall majority too. Historically, the net approval of the party leader (the percent of people satisfied minus the percent of people dissatisfied with the party leader) has been a very good predictor of the election winner, correctly predicting every...

10 Nov 19: Chief Economist´s Comment - Sunday Wrap

• German Finance Minister Olaf Scholz’ call for deeper European integration via the completion of the European Banking Union, and:
• Hungarian central bank Governor Gyorgy Matolcsy’s piece in which he calls the euro a “harmful and fruitless dream”; a “trap” which “we need to work out how to free ourselves from”.

04 Nov 19: Chart of the Week - The labor market is showing signs of softening

• In many advanced economies, manufacturing activity and trade are weak, reflecting trade tensions and slower global growth, but so far there are few signs that this weakness is spilling over into domestic labor markets and private consumption. Our Chart of the Week, however, shows that this may just be a matter of time. Job openings (or vacancies), which are typically a good predictor of the...

03 Nov 19: Chief Economist´s Comment - Sunday Wrap

• I’ll first discuss Lagarde’s dilemma at the ECB, and reflect on how she may go about it.
• I’ll then turn briefly back to the UK, where a general election – widely seen as a proxy referendum on Brexit – has been called for December 12. I see more trouble ahead.

27 Oct 19: Chief Economist´s Comment - Sunday Wrap

• Question 1: Why do you think the US will slow significantly next year, and what will trigger it?
• Question 2: How bad is European – and German – growth, and will there be a fiscal response?
• Question 3: What will the ECB do under Lagarde?
• Question 4: Brexit: Will we soon get a degree of certainty?

23 Oct 19: Chart of the Week - Eurozone non-financial firms: Worsening profitability, resilient investment (for now)

• Our Chart of the Week shows that investment spending by non-financial corporations (NFCs) in the eurozone has remained resilient despite a material worsening of these firms’ profitability. In the chart, our gauge of profitability is gross operating surplus, which is the national-account equivalent of EBITDA.
• With profitability weakening on the back of the slowdown in economic activity and rising...

10 Dec 19: Rates Perspectives - Supply Outlook 2020: Still heavy activity at extra-long maturities

• We expect gross EGB supply to amount to EUR 860bn in 2020, roughly EUR 30bn larger than this year. This increase will be a result of moderately higher redemptions and deficits and of a different funding mix compared to 2019, with issuance of domestic bonds somewhat larger than this year.
• A combination of low (even negative) yields and quantitative easing is likely to support demand for duration. We...

21 Nov 19: UniCredit Macro & Markets - 2020-21 Outlook: Late-cycle blues

• Macro: Global growth is set to weaken further to 2.7% in 2020, as the US economy is likely to enter a downturn, protectionist tensions are unlikely to fade materially and the resilience of the domestic drivers of eurozone growth starts to wane. The Fed will probably cut rates by 100bp, while the ECB is expected to stand pat and focus on its policy review. Economic growth in the CEE region will...

21 Nov 19: UniCredit Macro & Markets - 2020-21 Outlook: Late-cycle blues

• Macro: Global growth is set to weaken further to 2.7% in 2020, as the US economy is likely to enter a downturn, protectionist tensions are unlikely to fade materially and the resilience of the domestic drivers of eurozone growth starts to wane. The Fed will probably cut rates by 100bp, while the ECB is expected to stand pat and focus on its policy review. Economic growth in the CEE region will...

25 Sep 19: The UniCredit Economics Chartbook - Global slowdown under way – and still downside risk (4Q19)

• Dear Reader, welcome to the latest issue of our Economics Chartbook, in which we are fine-tuning some of our growth forecasts to take into account a weaker global economy. Major central banks have been supportive, especially the ECB, but this can only mitigate the downside risks.
• Global: We are revising slightly downward our global GDP growth forecast for this year by 0.1pp to 3.0% while...

16 Oct 18: Shortened version of the Euro Credit Pilot (October 2018)

This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.

• Corporate credit spread performance has shown some interesting divergence between synthetics and cash bonds. In synthetics, credit risk premiums have drifted wider over the last two weeks. The iTraxx Main traded at around 68bp from the time of the roll into the new...

10 Dec 19: Chart of the Week - Signs of complacency in equity markets are rising

• Our Chart of the Week shows net-short positions in Chicago Board Options Exchange (CBOE) Volatility Index (VIX) futures along with the three-month performance of the S&P 500 (advanced by three months). The amount of net-short positions in the VIX futures recently rose to its highest level since the launch of this instrument in 2004, according to the latest data from the Commodity Futures Trading...

21 Nov 19: UniCredit Macro & Markets - 2020-21 Outlook: Late-cycle blues

• Macro: Global growth is set to weaken further to 2.7% in 2020, as the US economy is likely to enter a downturn, protectionist tensions are unlikely to fade materially and the resilience of the domestic drivers of eurozone growth starts to wane. The Fed will probably cut rates by 100bp, while the ECB is expected to stand pat and focus on its policy review. Economic growth in the CEE region will...