The Weekly Briefing from Capital Economics

The good news is our China team has solved a mystery about Chinese property construction: why has it held up so well, even as sales and starts have collapsed? The bad news is that their conclusions point to a painful adjustment with massive implications for China’s growth and policy outlook.  With Neil Shearing out this week, Chief Asia Economist Mark Williams is on The Weekly Briefing from Capital Economics to tell David Wilder why China faces a wrenching economic future – and why officials at the National People’s Congress seemed so unfazed about the growth challenges. Plus, speculation about Fed rate cuts took hold in Q4 last year and equities prices surged. Then policymakers pushed back on those expectations coming into 2024 – and prices still surged. As a bubble forms in the market, Markets Economist James Reilly explains what’s driving stocks as hopes for policy easing ebb and flow, how stocks could respond when the Fed finally does cut rates, and what a Trump re-election could mean for the market. Click here to explore the analysis and events referenced in this episode.

China. Inflation. Trump. In this week’s episode of The Weekly Briefing from Capital Economics, Neil Shearing addresses some of the questions which kept coming up during a recent round of client meetings in the Middle East and Asia. (00.00-10:15)Also on the show, Paul Dales and Ruth Gregory from our UK team preview the coming week’s Spring Budget and discuss why the UK’s fiscal constraints mean that the winner of this year’s general election faces some ugly choices. (12:19-20:57)Plus, as the European carbon price falls to fresh lows, Caroline Bain and David Oxley talk about the forces weighing on prices, but also why market reforms should see prices turn around over the medium-term. (22:13-28:25)Click here to explore the analysis and events referenced in this podcast.

For all the blustering about trade wars, the fact is that Donald Trump’s punitive actions against China during his presidency didn’t do much to hurt its economy. But it’ll be a very different story if he wins in November and makes good on his pledge to slap tariffs up to 60% on Chinese imports.  Group Chief Economist Neil Shearing talks to David Wilder in the latest episode of The Weekly Briefing about what Trump 2.0 might mean for China, and how fresh trade actions could exacerbate the forces that are fragmenting the global economy. Neil also explains what lies ahead for this stock market bubble in the wake of that Nvidia earnings report and previews the coming week’s key inflation data for the euro-zone and the US.  Also on the show, Asia-Pacific Head Marcel Thieliant and Senior Markets Economist Tom Mathews discuss what the stunning rebound in Japanese stocks says about its economy and Ariane Curtis from our Global Economics team introduces the Long Run Economic Outlook, our unique, in-depth look at the world to 2050. 

In a week in which UK and Japanese data both confirmed two consecutive quarters of contracting GDP, Group Chief Economist Neil Shearing explains why the concept of “recessions” can be unhelpful in understanding the state of economies. He also tells David Wilder why, whoever wins in upcoming elections, governments on both sides of the Atlantic are likely to be shackled by fiscal constraints. Plus, the most aggressive monetary tightening in a generation appears to have succeeded without breaking anything. Is the global economy off the hook or does financial instability still loom? Chief UK Economist Paul Dales speaks to David about his major new study on the theory and practice of tackling financial stability risks in a higher rate world.Click here to explore the analysis and events referenced in this episode. 

We’re trying a ‘quickfire round’ on this week’s episode of The Weekly Briefing from Capital Economics to get Group Chief Economist Neil Shearing answering the questions that clients have been asking most frequently in recent days:Could inflation rebound?Could escalation in the Middle East drive up inflation?Are falling commercial real estate valuations fuelling a new banking crisis?Is the boom in US productivity growth sustainable?Will Donald Trump start a trade war if he’s re-elected?Jonathan Petersen from our Markets team is also on the show to speak to David Wilder about the dollar and what the team’s ‘smile’ framework says about how the global economy is shaping the greenback outlook this year. Plus, in an exclusive clip from our latest emerging markets online briefing, economists Leah Fahy, Gareth Leather and David Omojomolo talk monetary policy, debt risks and ongoing restructuring negotiations.  

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.