• Current Reports  

    Published on August 29th, 2014

    The US has managed a steady but sub-par economic recovery with the crucial missing ingredient being a sustained pick-up in capital spending. There is some evidence this may be changing since yesterday’s second revision for 2Q14 GDP pointed to the main two engines of investment spending starting to fire simultaneously. It may be too early to declare the start of a new capital spending cycle, but for pretty much the first time since the post-2009 recovery started, both private residential and non-residential fixed investment look to be turning up together...
    Published on August 28th, 2014

    The US housing market seems to be coming off the boil with the latest national price measures pointing to significantly reduced gains. The worry is that professional investors are pulling back from the market as the share of home purchases made with cash fell to 37.9% in 2Q14 from a high of 42% the previous quarter (see report). Private equity firms such as Blackstone Group, the largest private landlord in the US, have bought an estimated 200,000 homes since 2009 as overburdened households handed back the keys to their suburban units and started to rent. As a result, the US ownership rate has slid from a peak of 69% in the mid-2000s to about 65% by June. So is it a case of the clever money winding down its interest as the quantitative easing-inspired boom-let of the last three years approaches an inevitable reckoning?...
    Published on August 28th, 2014

    Has China’s growth hit yet another soft patch? Growth disappointed early in 2014 as a property downturn led to severe pain in construction and heavy industry, prompting the government to ease up on fiscal and monetary policy. Better data in May and June seemed to show that looser policy had succeeded—until a suite of surprisingly weak readings in July raised the prospect that the mini-recovery had just been a mirage. Particularly concerning was the slowdown in credit growth, since many of the hopes for growth in the rest of the year rest on continued easy money. But while China’s growth prospects are hardly stunning, we don’t think the economy is stalling quite yet...
    Published on August 28th, 2014

    Has China’s growth hit yet another soft patch? Growth disappointed early in 2014 as a property downturn led to severe pain in construction and heavy industry, prompting the government to ease up on fiscal and monetary policy. Better data in May and June seemed to show that looser policy had succeeded—until a suite of surprisingly weak readings in July raised the prospect that the mini-recovery had just been a mirage. Particularly concerning was the slowdown in credit growth, since many of the hopes for growth in the rest of the year rest on continued easy money. But while China’s growth prospects are hardly stunning, we don’t think the economy is stalling quite yet...
    Published on August 27th, 2014

    The euro has now been ‘oversold’ on an RSI basis for more than a month, and the downside momentum seems to be accelerating. That should be no surprise given the poor relative economic performance of the eurozone, the increasing likelihood that the European Central Bank will soon be forced to embrace quantitative easing, and the chances that France, Italy and Portugal will resort to more aggressive fiscal stimulus. What’s more, German bund yields—now seemingly stuck below 1%—are no help to the currency. Still, after the euro’s fall from €1.393/US$ to €1.315/US$ in ten weeks, investors not yet short the currency may wonder whether they have missed the move. For such investors, we can propose a less stressful way to short the euro: go long the Swedish krona against the euro...
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