The Weekly Briefing from Capital Economics

The potential of artificial intelligence to reshape the global economy is more than just the breathless hype of headline writers. Paul Ashworth, our Chief North America Economist, explains why AI’s impact should be thought of in terms of previous technological developments such as railways and the desktop computer and how they transformed economies in their time.   Ahead of the 26th September launch of our major new report on what AI means for economies and markets, Paul discusses recent developments with large language models, where the technology is heading from here and why this could translate into massive productivity gains.  Plus Group Chief Economist Neil Shearing sifts through the latest central bank decisions to address client questions including: Why we think the Fed will be cutting rates more quickly and aggressively than officials are signalling Why the latest data from Europe is so worrying And why bond markets on either side of the Atlantic have been moving in different directionsFinally, Neil introduces our forthcoming work on where equilibrium interest rates are likely to settle in a post-pandemic world, and why this is something that all investors – regardless of what they’re investing in – are going to have to pay attention to. Click here to explore the analysis and events referenced in this episode. 

Discussion on the end of rate hikes and potential rate cuts. Speculation on the Bank of Japan raising rates. Analysis of hard landing fears in China. Examination of Europe's response to Chinese EV imports. Exploration of the discrepancy between US GDP and GDI.

For consumers, it’s the camera lenses on the outside that may draw them to Huawei's Mate 60 Pro. For those tracking shifts in the global macro narrative, it’s the chip inside the sanctioned Chinese firm’s newest flagship phone that’s most interesting.In the latest episode of the Weekly Briefing, Group Chief Economist Neil Shearing explains what one of the Mate 60’s key components means in the context of US controls on technology exports and the fracturing of the global economy.Neil also talks about the significance around Nvidia’s Jensen Huang going to India to meet Narendra Modi and also takes in the inflationary risks around the recent spike in energy prices.Plus, a big growth upgrade means the UK has overtaken Germany and is no longer at the back of the G7 pack. Chief Europe Economist Andrew Kenningham and Chief UK Economist Paul Dales discuss whether this matters in the grand scheme and the growth outlook for these two struggling economies.

As summer holidays draw to a close attention is quickly turning to September’s big central bank decisions. Group Chief Economist Neil Shearing and the team have been sifting through weeks of data from the US, euro-zone and UK to assess what the Fed, ECB and Bank of England are going to do when they sit down to decide their next moves on rates. He tells David Wilder what to expect from these meetings, but also what central bankers mean when they keep telling the press that intend to stay the course on policy tightening. Neil also talks about Ernie Bot, the new Chinese AI-powered chatbot, and what its release signals about the global race to dominate in this emerging General Purpose Technology.Plus, is policy paralysis over in Beijing? Chief Asia Economist Mark Williams talks about what’s in the latest stimulus announcement from the Chinese government and whether it’s enough to turn around China’s flagging economy.  Click here to explore the analysis and events referenced in this episode.

This podcast explores the growth outlook, China slowdown scares, and the hype around AI. It discusses the latest PMI readings, the problem with China stimulus hopes, and the impact of AI on the global economy. Additionally, it talks about the enthusiasm around AI affecting equities valuations, the recent market slowdown, and the forecast for the S&P 500 and Nvidia earnings.

Exploring the disconnect in the bond market as yields rise despite decreasing inflation; discussion on the spillover effects on emerging economies like China; insights into US-China fracturing, China's economic path, and fiscal policy outlook; analyzing the tightening fiscal policy and its impact on major economies and growth.

While China’s latest price reports have markets worrying about deflation, Group Chief Economist Neil Shearing thinks the real issue is what’s happening in core inflation against a backdrop of a struggling economy. He also reviews the “immaculate” July CPI report from the US and what means for the Fed and previews the UK CPI report for July due this coming Wednesday. Plus, Caroline Bain, our Chief Commodities Economist, talks about a raft of supply pinches facing commodities markets, from the collapse of the Black Sea Grain Initiative to Indian food protectionism to OPEC+ production cuts. Click here to explore the analysis referenced in this episode.

Economies aren’t doing what Economics 101 says they should be doing, with disinflationary evidence piling up, even as labour markets remain in relatively good shape. Group Chief Economist Neil Shearing talks to David Wilder about the sell-off in the bond market, potential paths to a soft landing, and the key messages from the July non-farm payrolls report. He also explains what an announcement from AMD says about artificial intelligence in a world of economic fracturing.Plus, Kimberley Sperrfechter and William Jackson discuss the risks around the upcoming presidential primary in Argentina.Plus, Julian Evans-Pritchard introduces our worrying new estimate for China’s economic trend growth rate and explains what that says about the underwhelming post-COVID recovery.  Click here to explore the analysis and events referenced in this podcast.

It was one of those turning points in the global economy which deserved more attention: Chinese passenger car exports exceeded Japan’s this past May, powered by the country’s rapidly-expanding electric vehicle sector. It’s a marker of China’s increasing dominance in this emerging industry, and another sign of Japan’s struggles to make more headway, despite its early forays into alternative fuel vehicles. But secure is China’s EV dominance, how big a threat are its EVs to the likes of Toyota, and will a steady flow of EV exports trigger a regulatory backlash? Julian Evans-Pritchard, our China Economics head, and Marcel Thieliant, who leads our Japan coverage, discuss the Chinese EV challenge and what it means for Japan’s auto industry in this special episode of The Weekly Briefing from Capital Economics. During their conversation, Julian and Marcel cut through the hype to address the key issues around the rise of China’s EV industry, including: ·        How Beijing nurtured a globally-dominant EV industry;·        The growing risk of Western protectionism against Chinese EVs;·        How Japan’s car makers lost their lead in alternative fuel vehicles.Click here to explore the analysis referenced in this episode.

The euro-zone may be mired in recession, but that won’t stop the ECB from raising rates again this coming week in order to get inflation – a “greedy beast”, according to Bundesbank President Joachim Nagel – under control. Deputy Chief Eurozone Economist Jack Allen-Reynolds tells David Wilder why another 25 basis point hikes is a done deal for this Thursday, but also why the ECB could take rates up to 4% from 3.5% now and keep them there – and what that means for an already-faltering European economy. Plus, Chief Commodities Economist Caroline Bain and Climate Economics head David Oxley discuss some of the macro, market and policy risks around the return of El Niño.And, in an exclusive clip from our UK ‘Drop-In’ about the June CPI report, Paul Dales, Ruth Gregory, Jonas Goltermann and Ashley Webb tell clients why we’ve raised our Bank Rate forecast, what recession will mean for the inflation outlook and what lies ahead for the Gilt market.Click here to explore the analysis and events referenced in this episode.