The Weekly Briefing from Capital Economics

The first trading week of 2026 has been a whirlwind of geopolitical shocks and big economic developments. Group Chief Economist Neil Shearing is back on The Weekly Briefing to break down an historic start to the year, including:The Maduro capture: Neil provides much-needed macro and market context behind the news of Nicolás Maduro’s capture in Venezuela.AI and US productivity impacts: Whether the "stunning" Q3 US productivity numbers suggest massive AI investments are moving the needle for the US economy – and whether other economies will soon start feeling the benefit.The labour market and the Fed: A review of the December payrolls report and what it could mean for the Fed.Also on the show: David Oxley and Kieran Tompkins from our Commodities team join us to make sense of a volatile week in the oil market. They discuss the reality behind expectations for a surge in Venezuelan oil flows onto the global market.

This recovery in commercial real estate is unique. Across the US, Europe, and Asia, it has been defined by persistent weakness in both investment and prices. On this special episode of The Weekly Briefing, Chief Real Estate Economist Kiran Raichura and Senior Real Estate Economist Amy Wood join David Wilder to discuss whether this weakness will persist through 2026 and where investors can still find outperformance. Kiran and Amy address:Why higher-for-longer interest rates remain the primary determinant of returns for most clients.What is required to bridge the gap between seller and buyer price expectations.Which traditional sectors offer the best returns, and which alternatives will provide significant outperformance.Why private credit markets represent the greatest downside risk to commercial real estate in 2026.Further reading:Key themes for global commercial real estate in 2026Global Commercial Property Chartpack (Q4 2025)

The final major week of the year in macro is in the books. Group Chief Economist Neil Shearing joins The Weekly Briefing to explain why the latest US inflation report should be taken with a “bucketful of salt,” while reviewing the year-end moves from the BoE, BoJ, and ECB. He reviews the latest moves from the Bank of England, the Bank of Japan, and the ECB, and talks about why a growing Chinese trade surplus has a corresponding deficit that could present a key risk to global macro stability.Plus, Deputy Chief Markets Economist Jonas Goltermann discusses one of our most prominent calls for 2026: why, despite recent wobbles, the AI-driven equities bubble will continue to inflate.

Neil Shearing, Group Chief Economist at Capital Economics, joins Jennifer McKeown, Chief Global Economist, to explore predictions for 2026. They discuss how AI will primarily boost U.S. GDP, projecting a 2.5% growth fueled by technology investments. The duo highlights potential risks, such as the impact of a possible AI equity bubble burst and fiscal fragility in advanced economies. They also examine tensions in U.S.-China trade relations and the potential policy shifts in Europe, painting a complex picture of the global economic landscape.

Join Andrew Kenningham, Chief Europe Economist, Neil Shearing, Group Chief Economist, and William Jackson, Chief EM Economist, as they dissect Europe’s economic landscape. They discuss the fading optimism in Europe, slow fiscal stimulus, and Germany's cautious approach to debt. The trio explores Europe's competitiveness against the US and China, highlighting weak innovation and protectionist measures. With concerns over fiscal risks in Italy and France, they ponder Europe's military-industrial challenges amid rising geopolitical tensions.

Paul Dales, Chief UK Economist, shares insights on the UK Budget's mixed reception, discussing the limited growth strategy and the potential role of AI in boosting productivity. Ruth Gregory, Deputy Chief UK Economist, highlights the looming political risks that might impact fiscal credibility and gilt markets. Meanwhile, Leah Fahy, China Economist, tackles the decline in fixed-asset investment, suggesting it's more about successful policy than just economic downturns, backed by alternative activity measures showing resilience in industrial performance.

Ruth Gregory, Deputy Chief UK Economist, dissects the turbulent lead-up to the UK's autumn Budget and its potential economic impact. Jonas Goltermann, Deputy Chief Markets Economist, raises concerns over the sustainability of the AI-led stock market rally, drawing parallels to past bubbles. Meanwhile, Neil Shearing, Group Chief Economist, discusses the implications of the recent Trump-Mohammed bin Salman meeting and the shifting dynamics in US-Saudi relations amid a fracturing global economy. Expect insights on fiscal policy, market risks, and geopolitical shifts.

Neil Shearing, Group Chief Economist at Capital Economics, discusses the delayed economic reports due to the US government shutdown and the need for coherent fiscal strategies. Vicki Redwood, a Senior economic advisor, analyzes AI's impact on entry-level jobs, explaining the nuances of market trends and the role of other factors like degree inflation. Mark Williams, Chief Asia Economist, touches on India's rare earths sector and how AI presents both challenges and opportunities, particularly in outsourcing and productivity enhancements.

Neil Shearing, Group Chief Economist at Capital Economics, discusses Rachel Reeves' subtle tax hints and their dual audience of MPs and bond markets. He delves into potential fiscal risks from the Supreme Court's tariff decisions, exploring their implications on US revenues. John Higgins, Chief Markets Economist, argues that recent US equity sell-offs are mere corrections within a robust AI-driven rally, emphasizing the sustainability of earnings and market concentration among mega-cap firms as central to future forecasts.

The Fed is trying to calibrate policy in the midst of a government shutdown that’s effectively cut off the flow of data. Jerome Powell says that when you’re driving in fog, you should slow down – but there’s still a case for the FOMC to follow this past week’s rate cut with another move in December, says Deputy Chief North America Economist Stephen Brown. He talks to David Wilder about why the state of the US economy argues for another cut this year, but fewer in 2026 than markets currently expect.That Fed meeting wasn’t the week’s only big event. In Korea, Donald Trump held the first face-to-face meeting of his second term with Xi Jinping. The one-year truce resulting from that meeting has eased near-term US-China trade tensions, but much could still go wrong, warns China Economist Leah Fahy. She discusses what might plunge bilateral relations back into crisis, the health of China’s economy, and why – even if Washington clears Chinese firms to buy cutting-edge AI chips – they may not do so.Analysis and events referenced in this episode:Drop-In: The Fed, ECB and Bank of England – Latest decisions and policy outlookCapital Economics EventsRead: Fed cuts and ends QT, but further loosening not guaranteedRead: Bank of Canada cuts but thinks it has done enoughXi-Trump talks buy China time to decouple at its own paceThe economic and market impact of AI