Stress in the British financial markets has remained subdued over the four weeks since the general election. The RSM Brexit Stress Index, which measures financial and economic risk surrounding Britain’s impending departure from the European Union, started the new year at an insignificant 0.03 standard deviations above normal levels of implied stress, just slightly higher than last week’s 0.02 standard deviations below normal levels of stress. … READ MORE >
Economics
ISM Manufacturing report puts a dent in prospect of global re-acceleration
A narrative began to emerge among investors and policymakers in the last quarter of 2019 that a global economic re-acceleration was at hand, thanks to an expected rebound in manufacturing. But the December ISM Manufacturing report, released on Friday, coupled with the fallout from rising tensions in the Middle East, have put a significant dent in that thesis. The result will most likely be a reduced appetite for risk and lower global asset prices in the coming days. … READ MORE >
Increased shale production partially insulates American economy from Iran conflict
The reaction to the killing of Iranian Major General Qassim Suleimani, the commander of Iran’s Revolutionary Guards Corps, across oil, energy and financial markets has been muted. For now, investors are focused on the supply component of the global oil equation. … READ MORE >
As American farmers struggle, lenders become advisers
As painful as this year has been for American farmers, it is also forcing a reckoning among lenders and should prompt a rethinking of their role, one that goes beyond primarily being a source of financing, and instead becoming more as a trusted adviser. … READ MORE >
Housing to start 2020 with a bang
November housing starts rose by 3.2% to a seasonally adjusted rate of 1.365 million in November, exceeding expectations. The news kept on rolling with housing permits, a leading indicator of future starts, rising to 1.482 million – the highest in 12½ years. … READ MORE >
Boeing’s stopping of 737 Max production will affect far more than just Boeing
Boeing’s announcement this week that it would halt production of its troubled 737 Max in January 2020 will have an impact that extends far beyond its own business, and will most likely shave 0.5% off first-quarter GDP in the United States. … READ MORE >
November retail sales not full of holiday cheer
The traditional holiday sales did not get off a robust start in November, which was most likely because of a late Thanksgiving holiday that pushed some spending into December. … READ MORE >
RSM Brexit Stress Index plunges as Johnson gains clear victory
Stress in the British financial markets plummeted as voters handed the Conservatives and Prime Minister Boris Johnson a clear victory on Thursday, signaling years of gridlock over Brexit … READ MORE >
Fed leaves rates unchanged and points to shift on inflation target
The Federal Open Market Committee on Wednesday said it had retained its accommodative policy stance by keeping the federal funds rate in a range between 1.5% and 1.75%. … READ MORE >
Expect the Fed to stick to the script
We expect the Federal Reserve will keep its policy rate in a range between 1.50% and 1.75% at the December FOMC meeting. The major interest of investors and policymakers will naturally be the movement in the dot plot, which we expect to move into alignment with the current policy rate, with 2020 to the midpoint of the current target range near 1.62%. … READ MORE >