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EUROPE
Nobel
economists say policy blunders pushing Europe into depression – The
Telegraph
German
Chancellor Angela Merkel defends eurozone and says it is hard to manage a
currency for 18 states
Draghi
Gets Weaker Euro With Economy Needing It Most – BB
European
investors facing record-low interest rates are sending the most money overseas
in six years, an ECB report showed this week. That has helped push the euro to
an almost one-year low versus the dollar
The OMT
programme was justified but the fiscal union question remains – Bruegel
The
monetary union, even with the OMT programme, is incomplete and the issue of
fiscal union remains unresolved. To permanently stabilise monetary union, the
EU will need to agree on a small fiscal union.
How to
jumpstart the Eurozone economy – voxeu.org
The
stagnating Eurozone economy requires policy action. This column argues that EZ
leaders should agree a coordinated 5% tax cut, extension of budget deficit
targets by 3 or 4 years, and issuance of long-term public debt to be purchased
by the ECB without sterilisation.
Italy’s
Downward Spiral – Project
Syndicate
Hans-Werner
Sinn: Italy is now in a triple-dip recession. But it didn’t get there by itself:
Though the economy’s long slide reflects Italian leaders’ failure to confront
the country's loss of competitiveness, it is a failure that is widely shared in
Europe.
Euro
area deflation monitor – Danske
Bank
Inflation declined
to a new cycle low of 0.4% in July and, excluding taxes, was only 0.2%...We expect
a further decline in inflation to 0.3% in August (released 29 August), which could
result in new downward movements in inflation expectations…Later this year, we forecast
an increase to 0.7% partly as higher global food prices will increase food consumer
prices.
Italy to
delay budget update to accommodate new EU rules – Reuters
Italy will
release its regular autumn budget in October rather than September to allow it
to use the European Union's most up-to-date accounting methods.
Worse
than the 1930s: Europe’s recession is really a depression – WaPo
It's a
policy-induced disaster. Too much fiscal austerity and too little monetary
stimulus have crippled growth like almost never before. Europe is doing worse
than Japan during its "lost decade," worse than the sterling bloc
during the Great Depression, and barely better than the gold bloc then
Weaker
German Industry Needn’t Be A Disaster – WSJ
The more
German domestic demand picks up, the more likely it is that the economy will
draw in exports from the rest of the euro zone and thus end up supporting
growth across the single currency region. That’s the theory anyway.
MACRO NUMBERS
UK retail
sales growth falls to eight-month low, public finances weak – Reuters
August
2014: Flash Consumer Confidence Indicator – Europa
UNITED STATES
Fed’s George:
Easy-Money Policies Should End Sooner Rather Than Later – WSJ
Fed’s
Williams Still Sees Rate Hikes Some Time Next Year – WSJ
Despite
Retreat, Fed to Keep Bond Buys in Policy Toolkit – WSJ
FOMC MINUTES (more in yesterday’s post)
Cherry
picking for hawks and doves – TradingFloor
Goldman
Post-Mortem: Minutes Have More Hawkish Tone – ZH
Hawkish Fed
Sends USD, Bond Yields Soaring; Stocks Dump & Pump – ZH
The Fed’s
July Minutes show it, predictably, inching towards the exit – WaPo
New Fed
Exit Strategy Emerges and Foreign Banks Big Winners – WSJ
Fed
officials haven’t decided when to raise short-term interest rates, but they are
closer to finishing a blueprint for how they’ll do it.
JACKSON HOLE
Jackson
Hole: 'Tremendous' Downside Risks If Yellen Doesn't Go Full-Dovish – ZH
Citi’s
Englander: The consensus expectation is overwhelming that Fed Chair Yellen will
deliver a dovish message at Jackson Hole….Our question is whether Yellen can be
more dovish than what is now priced in, not whether she will be dovish on the
Richter scale of dovishness.
The
Legend of Jackson Hole – FT
Jackson
Hole’s reputation owes much to the speeches Ben Bernanke gave from 2007 to 2012…
But much of this was an accident of timing rather than a deliberate plan to use
Jackson Hole to send a message. It happened each year that the economy
deteriorated during the spring and summer, leading the Fed to launch a new
round of stimulus in the autumn
Not One
Analyst Thinks Yellen Will Say Anything Remotely Hawkish – ZH
How
Jackson Hole became such an important economic talking shop – The
Economist
Wall
Street Cut From Guest List for Jackson Hole Fed Meeting – BB
MACRO NUMBERS
U.S. existing home sales rise at fastest
pace in 10 months – Reuters
Foreclosed-Property Sales
Fall to Lowest Levels Since 2008 – WSJ
U.S. leading indicator increases solidly
in July – Reuters
Philly Fed
factory activity accelerates in August – Reuters
Jobless
Claims in U.S. Declined More Than Forecast Last Week – BB
U.S.
jobless claims fall, bolster labor market outlook – Reuters
ASIA
China’s
Fire Next Time – Project
Syndicate
The Chinese
economy has been stabilizing in recent months, easing fears of a financial
crisis. But, with the economy's fundamental problems – particularly a sharp
rise in corporate debt – remaining unresolved, the respite may be brief.
News In
Charts: Is the PBOC Now Pulling On A String? – Alpha
Now
The risk of
a hard landing in China has been creeping up over the past
few years. Recent data, notably on total social financing and on house prices,
suggest that process has accelerated. Without swift, effective policy action,
our hard landing scenario could quickly become our central case – with profound
implications for China and the rest of the world.
OTHER
Daily
Central Banks – WSJ
Douglas’s Take: BOE Dissents Mean Higher
Risk of Early Rate Rise * Fed Minutes: Rate-Hike Debate Heating Up * New Fed
Exit Strategy Emerges and Foreign Banks Are Big Winners * Brazil Announces New
Measures To Improve Credit Transactions * China Economy Flashes Red Again
Daily
Macro – WSJ
After all
the nervousness they exhibited in the first week of August, investors have
adopted the opposite sentiment since then, with stocks again seemingly
impervious to negative news. European equities are higher this morning, for
example, despite a significant deceleration in HSBC’s China “flash”
manufacturing PMI and in a mixed bag of results from the equivalent data out of
the euro zone. The main reason for the improved mood is an easing in
geopolitical tensions but it also seems to suggest that with central banks
still continuing to err on the side of stimulus, there’s simply too much money
on the sidelines. It can’t sit idle for too long.
EMEA
Weekly, Week 35 – Danske
Bank
CEE stuck between
geopolitics and deflation fears
AUG PURCHASING MANAGER INDICES
Japan
Manufacturing PMI – Markit
China
Manufacturing PMI – Markit
China HSBC
flash PMI at 3 month low – TradingFloor
China PMIs
appear to have peaked, possible stimulus limits downside – Danske
Bank
Japan
manufacturers' mood, output rise, outlook dims – Reuters
China
economy fears deepen as August HSBC flash PMI at three-month low – Reuters
Japan
August flash PMI shows manufacturing accelerated as orders grow – Reuters
China
Manufacturing Gauge Drops as Growth Pickup Stalls – BB
France
Composite PMI – Markit
Germany
Composite PMI – Markit
Eurozone
Composite PMI – Markit
Euro PMIs
continue to indicate solid domestic demand – Danske
Bank
French
business activity stagnant in August – Reuters
Euro zone
business growth slows in July, prices fall – Reuters
Euro Area
Shows Signs of Weakening as Surveys Miss Forecasts – BB
Global PMIs
point to punch-drunk and confused economy – TradingFloor
Europe Is
Failing – BI
US
Manufacturing PMI Surges To Over 4-Year High, Biggest Beat On Record – ZH
U.S.
factory activity expands at fastest pace in over four years in Aug – Reuters
FINNISH
Meneekö demokratia muodista – kommentteja YLE:n ohjelmiin
– Tyhmyri