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China foreign ministry: US economic bullying flouts principle of market economy

  
Analysis, Economy

The Global Times citing some comments by the Chinese foreign ministry

The comments are via a series of tweets:

“The #US is used to suppressing specific countries and enterprises without any solid evidence, said Chinese FM, slamming the #FCC for barring China’s #Huawei and #ZTE from supplying US carriers in rural areas.

This economic bullying by the #US side blatantly flouts US’ principle of market economy. If this principle does not need to be adhered to, other countries can also do the same to US companies: Chinese FM”

This is not anything new really. We have heard these comments before as they have constantly voiced out their displeasure over the Huawei issue. But the warning on other countries potentially being preferred as business/trade partners is one to just be wary of.

Germany November Ifo business climate index 95.0 vs 95.0 expected

  
Analysis, Economy

Latest data released by Ifo – 25 November 2019

  • Prior 94.6; revised to 94.7
  • Expectations 92.1 vs 92.5 expected
  • Prior 91.5; revised to 91.6
  • Current assessment 97.9 vs 97.9 expected
  • Prior 97.8
Slight delay in the release by the source. A measure of business conditions, sentiment and expectations towards the German economy.
The readings are within expectations and reaffirms some stability in sentiment and outlook towards the German economy so far in Q4. That said, the overall confidence levels remain low with risks to the economy still ever present.
EUR/USD keeps steady at 1.1021, near unchanged levels on the day currently.

Eurozone November flash manufacturing PMI 46.6 vs 46.4 expected

  
Analysis, Economy
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Latest data released by Markit – 22 November 2019

  • Prior 45.9
  • Services PMI 51.5 vs 52.4 expected
  • Prior 52.2
  • Composite PMI 50.3 vs 50.9 expected
  • Prior 50.6
The report here sort of summarises the overall sentiment from the French and German releases earlier. While there are green shoots starting to be observed in the manufacturing sector, domestic demand is beginning to weaken further as pointed out by the services print.
And when you weigh that as a whole, the composite reading still points to continued weakness in the euro area. As such, even if there are signs of hope, it is too soon to say that the European economy is on its way to a sustained recovery.

China president Xi: We are not afraid of a trade war

  
Analysis, Economy

Further comments by China president Xi Jinping

Xi Trump
  • China did not start trade dispute with the US
  • Will not flinch from such a fight
  • Wants to work out agreement on trade on the basis of mutual respect, equality
  • When necessary, we will fight back
  • But we have been working actively to try and avoid a trade war
He is continuing with the usual rhetoric from the Chinese camp from the past few months. It’s pretty much a copy and paste of what they have been reiterating all along.
I reckon that gives you a sense of where the current standing is in terms of getting towards a “Phase One” trade deal.

Japan headline inflation data for October misses, core-core beats

  
Analysis, Economy
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The headlines National CPI comes in at 0.2% y/y, a “miss” on estimates.

  • expected 0.3%, prior was 0.2%
National CPI y/y excluding Fresh Food is 04% y/y
  • expected 0.4%, prior was 0.3%
National CPI excluding Food, Energy is 0.7% y/y a “beat” on estimates
  • expected 0.6 %, prior was 0.5%
I generally do not like describing CPI data in terms of misses and beats but made an ex[pcetion today.
The ‘core-core’ referred to is CPI excluding Food & Energy, this is the closest measure to what is termed ‘core’ CPI in the US. As you can see, slightly above the median consensus. While well short of the 2% BOJ target, a tiny bit of good news for the Bank.
Yen doing pretty much nothing on the data release. As is usual.

OECD trims 2020 global growth forecast to 2.9% from 3.0% in September

  
Analysis, Economy
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OECD with an updated forecast on the global economic outlook

Global
  • 2019 global GDP growth at 2.9% (unchanged)
  • 2020 global GDP growth at 2.9% (previously 3.0%)
  • 2019 US GDP growth at 2.3% (previously 2.4%)
  • 2020 US GDP growth at 2.0% (unchanged)
  • 2019 China GDP growth at 6.2% (previously 6.1%)
  • 2020 China GDP growth at 5.7% (unchanged)
  • 2019 Eurozone GDP growth at 1.2% (previously 1.1%)
  • 2020 Eurozone GDP growth at 1.1% (previously 1.0%)
  • 2019 UK GDP growth at 1.2% (previously 1.0%)
  • 2020 UK GDP growth at 1.0% (previously 0.9%)
  • 2019 Japan GDP growth at 1.0% (unchanged)
  • 2020 Japan GDP growth at 0.6% (unchanged)
The September forecasts can be found here. If anything, it shows that the dark clouds surrounding the global economy are starting to settle for a bit – not getting significantly worse at the very least.
However, any significant rebound is still far away and needs more convincing so let’s see how sentiment changes if we do or do not get a “Phase One” trade deal.

Global debt reaches record levels

  
Analysis, Economy
  Tags

Global debt is currently at it’s highest level in peacetime,

On average, the world’s major economies, have debts of more than 70% of their GDP’s. This is the highest level in the past 150 years apart from s spike during WWII. See the chart below courtesy of the Financial Times

Global debt is currently at it's highest level in peacetime,

In the UK that debt deficit is presently at around 87%, but it is only set to grow with both Conservative and Labour plans to increase public spending levels. This will in part be a Brexit boost to lift morale. Increasing welfare states, growing democracies and an ageing population all lead to to the conclusion that global debt is set to keep growing.

Debt

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