The market s fresh reminder? Stocks don t just go up cbc.ca - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from cbc.ca Daily Mail and Mail on Sunday newspapers.
MacroBusiness
Access Subscriber Only Content
UBS with the note:
Q2 CPI forecast revised up: to lift 0.9% q/q & 4.0% y/y, highest since the GFC
We sharply revise up our Q2 CPI forecast. Headline is now expected to lift by 0.9% q/q, above our long-held preliminary forecast of 0.6%, and further above the available consensus of ~0.3% (albeit ‘stale’ & likely higher now), and the RBA’s implied ~½%, even after Governor Lowe’s raised their forecast from the May SOMP which had only ~0.2%. This would differ from Q1 which was surprisingly well below consensus, but ~in-line with the RBA’s forecast. We also expect the y/y to spike to 4.0% (mkt: ~3.4%, RBA ~3½%) – as the record fall in Q2-20 drops out – the fastest pace since leading into the GFC peaked at 5.0% in Q3-08. This would be up very sharply from 1.1% in Q1.
MacroBusiness
Access Subscriber Only Content
This feels like a leak:
The Sydney lockdown has no end in sight and will need to take cases to zero before being lifted.
The RBA will reverse its taper if it continues as economic damage mounts.
Sydney accounts for one-quarter of national output and Melbourne is shut as well.
If Sydney is not out of lockdown by mid-August the RBA will move.
Makes sense to me. If nothing else, the RBA should be watching semis carefully to ensure borrowing costs do not rise for states as they deal with the health crisis.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
MacroBusiness
Access Subscriber Only Content
Macquarie’s magnificent Viktor Schvets on the tough choices facing China:
While quantifying grow this always more of an art than a science, in China it is even more so. Based on the Soviet-style production and growth targets (vs expenditure derived ex-post estimates elsewhere), China’s economic results are even more opaque than usual. This has created a vibrant field of studies, with views ranging from China soon overtaking the US to China being a ‘Paper Tiger’.
At the heart of this debate is the productivity trajectory, and ability of China to improve efficiency while satisfying a myriad of social and political objectives. Depending on methodology employed, China’s TFP (or Total Factor Productivity, after excluding contribution of labour and capital) has either already gone negative or has suffered from a significant slowdown. One of the best sources of productivity data (i.e.,Conference Board–TED) has alternative measures
MacroBusiness
Access Subscriber Only Content
Goldman with the note:
The UAE and Saudi Arabia appear close to reaching a production agreement, with Reuters reporting progress towards a deal that would allow for both the higher baseline requested by the UAE (of 3.65 mb/d starting in April 2022) as well as an extension of the output agreement requested by Saudi (through December 2022). We assume that the such a deal – if confirmed – would likely come alongside a gradual 0.4 mb/d monthly ramp-up in production through December 2021, as all OPEC+ members had already supported this decision.
Such an agreement would help bridge the (modest) divide between both countries and help remove the (low probability) OPEC+ tail risks of a potential price war or insufficient production growth, as we expected. While some details remain uncertain, like the August and September quotas or the baseline of other countries, these are of limited magnitude and importance to the global oil market outlook