The Weekly Briefing from Capital Economics

If Jerome Powell dampened talk of a March rate cut on Wednesday then the January payrolls report on Friday stamped it out for good. In the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing dives into the latest US jobs numbers to discuss what they say about the health of the labour market and what they signal about the timing of the first Fed rate cut this year. Neil also talks to David Wilder about what’s happening with inflation and labour markets in Europe and the UK and whether generative AI is already giving productivity growth a boost. David also talks to Kiran Raichura about the exposure of US banks to real estate loans. With $1.2tn in loans coming due over the coming two years, Kiran explains where distress is most likely and whether CRE’s problems threaten a crisis in the banking sector. 

Post-ECB and pre-Fed and Bank of England meetings, Group Chief Economist Neil Shearing explains what 'data dependency' means for central banks as they try to gauge when to begin rate cuts – and to manage the market’s expectations about when those cuts will start.David Wilder is also joined by Deputy Chief Global Economist Simon MacAdam to discuss the inflation risks stemming from disruptions to shipping in the Red Sea. Simon explains how our new Shipping Disruption Dashboard helps investors cut through the noise to assess exactly what risk Houthi attacks present to global supply chains and the inflation outlook.Finally, in an exclusive clip from our latest monthly Asia Drop-In, China Head Julian Evans-Pritchard and Senior Markets Economist Tom Mathews discuss whether a string of announcements from Beijing will be enough to support the country’s struggling economy and stock markets.Click here to explore the analysis and events referenced in this episode.

Why are markets pushing back on rate cut expectations? How will the ECB play its upcoming meeting? What’s really happening to China’s economy? Group Chief Economist Neil Shearing tackles the big macro and market questions in our latest episode of The Weekly Briefing. Plus, our forecast for the S&P 500 this year is one of the most bullish in the market. John Higgins, who leads our financial markets team, tells David Wilder what’s behind the forecast, including why valuations may not be so stretched, how earnings will fare in a weaker US economy, and the risks that a bubble is already forming. Click here to explore the analysis and events referenced in this show.

With US and UK strikes on Houthis in the headlines and Taiwanese voting in their flashpoint election, Group Chief Economist Neil Shearing unpicks what the now- clichéd idea that we live in a “more dangerous world” actually means for thinking through macro risk.He discusses with David Wilder our framework for looking at a world that’s fracturing into competing economic blocs and what this means for globalisation, as well as how the US election outcome in November could radically shift the narrative.Neil also previews the coming week’s UK CPI release and explains what it could mean for the timing of rate cuts and talks about what the return of bond vigilantes means for governments in a higher rate world.Plus, last year was a watershed moment for the global energy market as the US became the largest exporter of LNG. Bill Weatherburn from our Commodities team has just completed five-year forecasts which show another 60% surge in US energy net exports.He tells David what will drive the surge, discusses the potential impact of November’s election and what this all means for the global economy.Click here to explore the analysis and events referenced in this podcast. 

The Fed-triggered financial market exuberance which ended 2023 hasn’t carried into the new year, with yields rising and equities struggling. Group Chief Economist Neil Shearing explains what’s changed – and what hasn’t – to explain this mood shift.In this latest episode of The Weekly Briefing, Neil also talks to David Wilder about the latest euro-zone inflation numbers and what they mean for the start of ECB rate cuts. Neil also previews the coming week’s US CPI release and, with Houthi attacks continuing to disrupt shipping in the Red Sea, he delves into the inflationary risks around conflict in the Middle East.Plus, with Taiwan’s presidential election less than a week away, Chief Asia Economist Mark Williams talks about potential outcomes. With Taiwan’s status probably the key flashpoint in a deteriorating US-China relationship, this election is likely to be one of the most consequential this year for the global economy.In his conversation with David, Mark profiles the three candidates for the presidency, talks about the potential direction of relations between Beijing and Taipei and explains the consequences for the Taiwanese and global economies. Click here to explore the analysis and events referenced in this episode. 

After the Fed supercharged the bond market’s recovery, Group Chief Economist Neil Shearing talks to David Wilder about issues around 2024’s flagged rate cuts, including the impact of loosening financial conditions as investors front-run policymakers, whether “team transitory” has been proved right, and why the ECB and Bank of England are still sounding decidedly hawkish.Plus, our EM team sees “unusually large” growth divergence coming for emerging market economies in 2024. Deputy Chief EM Economist Shilan Shah and Assistant Economist Leah Fahy highlight the key takeaways from our latest quarterly EM Economic Outlook – including how elections could shape these economies in the coming year.Finally, the agreement among participants of the UN Climate Conference in Dubai was described as “historic”, but what was actually achieved that will help meet climate goals? David Oxley, the head of our Climate Economics coverage, separates the reality from the hype to show why some of the cynicism around the deal isn’t entirely warranted, but also explains the challenges of building out renewables to meet COP28 commitments as well as the long-term impact of the green transition on the oil market.Click here to read the analysis referenced in this podcast episode.

The same questions kept coming up in our client briefings on the 2024 outlook and Group Chief Economist Neil Shearing tackles them in this latest episode of our weekly podcast. He talks about why economic resilience will be increasingly tested and which DM central banks are likely to cut rates first, but also talks about what could go wrong for our calls in the coming year. Deputy Chief UK Economist Ruth Gregory is also on the podcast to explain why the Bank of England won’t be in a hurry to ease policy next year and talk about how immigration is affecting the labour market. We’re also joined by Tom Ryan, who leads our coverage of the US housing market. Amid signs that a weird moment for the market is coming to an end, Tom talks about the outlook for mortgage rates and prices in a year that’s expected to see some hefty rate cuts from the Fed. Click here to explore the analysis and events referenced in this podcast.

Group Chief Economist Neil Shearing warns the potential threat to fiscal positions from higher rates is “perhaps the most important question hanging over the outlook for the next couple of years”. In this episode, he speaks to Head of Research Vicky Redwood and Andrew Kenningham, Chief Europe Economist, about the size and scope of that threat, including what governments need to do to keep markets onside, whether Italian and US debt positions are particular causes for concern and how a busy year for elections could shape the market’s perceptions of which issuers are at risk.Plus, after the FT’s Martin Wolf highlighted our unique analysis of global economic fracturing, Neil talks to Chief Asia Economist Mark Williams about why investors should be considering US-China competition in terms of blocs of aligned countries and territories rather than as individual economies. Mark shows how that economic competition looks very different when measured by these blocs, but also highlights the risks to our view that fracturing will remain a relatively benign process.Click here to read the analysis and register for the events referenced in this episode.

Group Chief Economist Neil Shearing tackles what we think will be the key themes for the global economy in 2024, including why the consensus for growth is too optimistic, how quickly the Fed could cut rates and how to think about the macro and market consequences of a full slate of elections. Plus, with COP 28 about to get underway in Dubai, Climate Economics head David Oxley and Climate Economist Hamad Hussain discuss why these high-level meetings aren’t the solution to a successful green transition and highlight just some of the key findings from our new CE Climate Reporting Tools. Click here to explore the analysis and events referenced in this episode. 

Does the surprise victory of Javier Milei in Argentina's presidential election mean the country is about to experience a raft of unorthodox economic policymaking to fix its ailing economy? How likely is Milei's dollarisation plan? What does this electoral victory mean for Argentina's negotiations with the IMF? In this special episode of The Capital Economics Weekly Briefing, Chief EM Economist William Jackson and Deputy Chief EM Economist Jason Tuvey get to grips with the potential risks around the election outcome and whether Javier Milei has what it takes to turn around the Argentine economy.Click here to explore our dedicated Argentina election hub page.