The Weekly Briefing from Capital Economics

Janet Yellen lent official voice to resurgent global worries about the threat of Chinese overcapacity when she pointedly criticised Beijing’s overinvestment and underpowered consumption during her trip there earlier this month.  But are the US Treasury Secretary’s criticisms justified? Will China’s leaders push through the necessary reforms to bring down the savings rate? And how will western governments respond if they don’t?  In the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing talks to Mark Williams, our Chief Asia Economist, all about the politics and economics around the perception that China’s factories are once again flooding global goods markets. 

The EM team has taken over the podcast this week to highlight two of the biggest issues in emerging market investing.  William Jackson talks to Shilan Shah about how emerging market economies will fare as fossil fuels are phased out in favour of green technologies. From oil producers in the Gulf and Africa to geopolitics and supply chains, William and Shilan tackle some of the key risks and opportunities facing emerging markets as the green transition progresses. Also, Liam Peach explains how his EM Financial Risk Indicators act as an early warning system for investors trying to identify bank, debt and FX vulnerabilities. In his discussion with Jason Tuvey, Liam talks about which economies are currently flashing red. Click here to read the analysis referenced in this episode. 

Before Neil Shearing gets on to discussing the key takeaways from our latest Global Economic Outlook, he talks to David Wilder about the inflationary risks stemming from the collapse of the Francis Scott Key bridge at Baltimore’s port.  The Capital Economics Group Chief Economist also explains what to make of the apparent contradiction of US business leaders making high-profile visits to China even as the US and UK governments slap sanctions on state-affiliated hackers. Also, this November’s big election is happening in the US but is being watched closely worldwide – not least in Canada and Mexico. Jason Tuvey and Stephen Brown talk through the risks of a potential re-election of Donald Trump, not least to the tripartite trade pact. Note: This week's episode is being published early ahead of public holidays in the UK. The next Weekly Briefing will be published on Monday, 8th April.

Group Chief Economist Neil Shearing and Chief Europe Economist Andrew Kenningham discuss the troubled German economy, exploring topics such as structural malaise, threat of Chinese electric cars, and risks from a resurgent political right-wing. They dive into challenges like slow growth, energy supply shifts, the car industry, and the impact of immigration. The conversation also covers future growth prospects, productivity growth, and the evolving political landscape in Germany amidst economic challenges.

A few hot(ish) US inflation prints has spooked the market about how easily the Federal Reserve can get back to its 2% target. In this latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing discusses whether those fears are justified and tells David Wilder what to expect from the coming week’s meetings from the Fed and the Bank of Japan.  He also talks TikTok, putting congressional efforts to ban the video app in the broader context of a fracturing global economy.  Plus, an exclusive clip from our recent briefing on the Russian presidential election explains why the economy has proven so resilient to sanctions and outlines what to expect under another six years of Vladimir Putin. Click here to explore the analysis and events referenced in this episode.

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.