World economy

2.USeconomy

Economists surveyed by WSJ expect US economy to enter recession in 2023

Link Securities| In the latest quarterly survey conducted by The Wall Street Journal, economists indicated that, although inflation has started to decline, they still expect high interest rates to push the US economy into recession in 2023. On average, business and academic economists put the probability of a recession in the next 12 months at 61%, down slightly from 63% in the October survey. Both percentages are historically high outside…


aranceles china

China’s overall trade surplus in 2022 reaches all-time high of $878 Bn

Bankinter| China’s December Trade Balance records a surplus of +$78B vs +$76.9B estimated and +$69.84B previous. Exports decelerate -9.9% vs -11.1% estimated and -8.7% previous. Imports also, but less: -7.5% vs -10% estimated and -10.6% previous. Opinion: The trade surplus widens, which is good news, but it is due to lower imports (a symptom of weak domestic demand) and not to a rise in exports. In fact, exports are falling,…


Japanese general

Japan: The beginning of the end of the BoJ’s Yield Curve Control

Alicia García Herrero (Natixis) | Financial markets were caught off guard when the Bank of Japan (BoJ) adjusted its monetary policy on December 20th, 2022. The Bank decided to lift the ceiling on the 10-year JGB yield to 0.5% from 0.25% under the yield control (YCC). One interesting point to make is that the BoJ did not take the decision against the wall. In fact, the upward pressure on the…


2018 Brazil elections are taking place in a particularly challenging environment

Santander, Telefónica, Iberdrola, Aena and Mapfre, Spanish companies most exposed to institutional instability in Brazil

Alphavalue /Divacons | The current political instability in Brazil could harm Spanish companies with an interest in the country. The police have regained control of Congress, the presidential palace, and the Supreme Court after the violent invasion carried out by supporters of Jair Bolsonaro. However, and despite the fact that Bolsonaro has distanced himself from the actions of the protestors, the political tension continues. Among the Spanish companies most exposed…


Federal Reserve

Jobs and growth data won’t deter the Fed’s resolve

J.P. Marín-Arrese | Last Friday, Wall Street jumped on employment and services data. Jobs openings, while better than expected, signalled a downward path. The service sector contracted for the first time till 2020. The ensuing bullish reaction shows the markets bet the Fed might undertake a U-turn earlier than pointed out in the last FOMC minutes. Investors seem to outwit the Fed, disregarding its determination to keep rates tight enough…


Be careful with the Taylor Law

Fed considers it appropriate to keep rates high for an extended period of time

Bankinter| From the minutes of the Fed’s meeting of December 13th and 14th: There was no explicit mention of the possibility of an interest rate cut in 2023; rather they argue that they believe it is appropriate to keep interest rates at elevated levels for an extended period of time, although they retain the flexibility to react as appropriate to the data at any given time. The Committee expresses concern…


Kristalina IMF

IMF warns: a third of the world economy will fall into recession by 2023

The IMF’s Managing Director, Kristalina Georgieva, warned on Sunday that the world faces a “tougher” year in 2023 than in 2022, saying that a third of the world economy will be affected by recession this year. “The US, China, and the eurozone are all slowing simultaneously. Half of the European Union will be in recession and over the next few months, China’s growth will be negative and its impact on…


global growth

Brave New Year 2023

J.P. Marín-Arrese | 2022 has witnessed an unmitigated rout in shares and bonds. The coming months might turn into additional bleeding as persistent inflationary pressures and robust employment data entice the central banks to tighten their monetary knot further. Other concerns also sap the investors’ risk appetite. China faces harsh times should it prove unable to cope with its endless pandemic stroke. Downbeat sales and profit prospects will soon surface…


factory pollution

China likely to be most affected by the EU’s new Carbon Border Adjustment Mechanism

Alicia García Herrero (Natixis) | On 13th December 2022, the EU passed a deal to set up a Carbon Border Adjustment Mechanism (CBAM) to arrest the carbon leakage problem and further support the energy transition. Carbon leakage in this context equates to the scenario that EU countries import carbon-intensive products from countries where carbon emissions are not taxed. More specifically, under CBAM, EU firms will need to pay the difference…


Federal Reserve

Uncertainty over monetary tightening hurts the economy

Juan Pedro Marín-Arrese | The Fed is running out of munition after raising its rates substantially. The narrowing margin forces it to slow down monetary tightening. Keeping unabated its previous speed would wreak havoc on the economy. Yet, Jay Powell countered any hope of further softening by delivering a relentless hawkish message at the latest press meeting that plunged stocks into utter disarray. Powell made it crystal clear at Jackon…