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In their latest podcast Brunello Rosa and Manas Chawla discuss why the West should be wary about seizing Russian assets to finance Ukraine's resistance.
19 April 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the outcome of the latest Ambrosetti forum.
12 April 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the re-militarisation of Europe, facing the threat of Russia's "war economy"
5 April 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss how Putin is turning Russia into a “war economy,” after the latest falsified elections
28 March 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the latest moves by the world's major central banks.
22 March 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why the upcoming Biden-Trump race won’t simply be a re-match of the 2020 election.
15 March 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the UK budget, Central Bank and upcoming elections.
8 March 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the Russia-Ukraine war two years in, and why a solution is not yet in sight.
29 February 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss how Navalny’s death reveals the strength of Putin’s regime in Russia, but also its fragility.
22 February 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss why liberal democracy is a stake with the next US Presidential elections
16 February 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss how central bank independence remains under attack by autocratic regimes.
9 February 2024
In their latest podcast Brunello Rosa and Manas Chawla discuss the latest moves by the world's major central banks.
2 February 2024
In June 2023, Rosa & Roubini Associates has been recognised for the second consecutive year as the best independent macroeconomic research & advisory firm by Corporate Vision Magazine
R&R provides independent research on the global economy
R&R provides independent advice on global issues
by Brunello Rosa
15 April 2024
Last week, the 2024 IMF-World Bank Spring Meetings took place in Washington, DC. The meetings occurred at a time of heightened geopolitical tensions, with the counter-attack by Iran into Israeli territory for the first time in history taking place just before the meetings began, and the retaliatory response by Israel, with the bombing of a military base near the central city of Isfahan, carried out on Friday morning on the last day of the meetings.
On the other hot geopolitical front, the US House of Representatives has finally approved a USD 60.1bn financial and military aid to Ukraine (as part of a broader USD 95bn military aid package, which includes Israel and the Indo-Pacific) that has been blocked for months by the opposition of the Republican party. This comes at the same time as the Biden administration has proposed a compromise solution about seizing Russian assets to finance Ukraine’s resistance, as we discussed in our column last week.
During these same days, the US decided to re-impose sanctions on Venezuela, albeit with some important carve-outs, given the lack of progress, or even backtracking, of President Nicolas Maduro in organising “free and fair” elections, in which candidates of the opposition had at least the theoretical chance to win.
On the macroeconomic front, the IMF certified that the global economy is, basically, “Steady But Slow” with “Resilience Amid Divergence.” The latest edition of the World Economic Outlook (WEO) kept the forecast for global growth in 2024 unchanged at the disappointing level of 3.2%, the same as in 2023 and as expected again in 2025. The US economy is seen accelerating in 2024 to 2.7% compared to the 2023 growth rate of 2.6%.
The Euro area is also seen accelerating from 0.4% in 2023 to 0.8% 2024, but this still represents less than a third of the US’ speed. Further confirming this divergence is the deceleration that the IMF sees for the largest EM economies, China (from 5.2% in 2023 to 4.6% in 2024), India (from 7.8% in 2023 to 6.8% in 2024), Brazil (from 2.9% in 2023 to 2.2% in 2024), Russia (from 3.6% in 2023 to 3.2% in 2024) and Mexico (from 3.2% in 2023 to 2.4% in 2024).
Inflation is clearly on a downward trend globally, but the recent rise in oil prices due to increased geopolitical tensions in the Middle East risks creating another bump in the descending dynamics of headline inflation. So the real question is: will central banks “look through” this potentially “temporary” increase in inflation, or will they fear that this may represent a stop in its positive trajectory? Theoretically speaking, if other shocks are not added to this one, the major central banks may conclude that a short-lived revitalisation of inflation does not fundamentally change the picture, and they may carry on with their intention of starting to reduce some of the monetary restrictions that have been introduced in the last couple of years.
Given all of this, markets may find some reason not to be too scared. Some monetary easing is on the way, although probably less than had been anticipated at the beginning of the year. Lower short- and longer-term yields should provide some relief to both fixed-income products and equity prices over the spring-summer period.
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by Fedor Dukhnovskiy
3 April 2024
by Nouriel Roubini
10 April 2024
by Sarah Ghotme
10 April 2024
Week: 22 - 28 April 2024
The Week Ahead: QoQ GDP To Decelerate in US; PCE Price Index To Increase In US; PMIs To Edge Down In UK, While Rising In EZ
In the US, in Q1, according to advance estimates, the GDP growth rate is seen decelerating to 2.5% q-o-q (p: 3.4%). In March, the PCE price index is expected to increase to 2.6% y-o-y (p: 2.5%), whereas the core PCE price index is likely to edge down to 2.6% y-o-y (p: 2.8%). In April, Michigan Consumer Sentiment is seen declining to 77.9 (p: 79.4).
In the EZ, in April, according to the flash estimates, HCOB Manufacturing and Services PMIs are expected to increase to 46.5 (p: 46.1) and 51.8 (p: 51.5) respectively. HCOB composite PMI is seen also rising to 50.8 (p: 50.3). In April consumer confidence is likely to rise to -14.0 (p: -14.9).
In the UK, in April, according to the flash estimates, S&P Global Manufacturing is expected to stay unchanged at 50.3, whereas Services PMIs is likely to decrease slightly to 53.0 (p: 53.1) and 51.8 (p: 51.5).
The Quarter Ahead:
The US House passed a $95 billion aid package for Ukraine, Israel, and Taiwan; Israeli Protests And Escalations
The US House has approved a $95 billion aid package for Ukraine, Israel, and Taiwan, sending it to the Senate. The Senate will review the House-approved bill on Tuesday, starting with preliminary votes in the afternoon. Final approval is anticipated next week, enabling Biden to sign it into law. The legislation allocates $60.84 billion for Ukraine's conflict ($23 billion for weapon replenishment), $26 billion for Israel ($9.1 billion for humanitarian aid), and $8.12 billion for the Indo-Pacific region, including Taiwan.
Protests in Israel. Israeli protesters rallied for new elections and stronger government action to free Gaza hostages. These demonstrations mark the latest wave of protests targeting Prime Minister Benjamin Netanyahu. In the meantime, Israel conducted a military strike on Iran early Friday, marking a potentially risky escalation in the expanding Middle East conflict. Iranian officials have downplayed the incident, and neither Israel nor Iran has officially acknowledged it. US Secretary of State Antony Blinken stated that the G7 nations are dedicated to reducing tensions between Israel and Iran.
Real Economy: EZ Headline And Core Inflation Rate Decreased; Inflation Rose In Italy: UK Unemployment Rate Edged Up
In the US, in March, retail sales increased by 4.0% y-o-y (p: 2.1%). In March, IP stagnated (p: -0.3%).
In the EZ, in March, headline and core inflation fell to 2.4% y-o-y (p: 2.6%) and 2.9% y-o-y (p: 3.1%) as expected. In March, monthly inflation rose by 0.8% (c: 0.8%: p: 0.6%). In April, the ZEW economic sentiment index increased to 43.9 (c: 37.2; p: 33.5). In Italy, the headline inflation rate edged up to 1.2% y-o-y (c: 1.3%; p: 0.8%).
In the UK, in March, the headline inflation rate eased to 3.2% y-o-y (c: 3.1%; p: 3.4%). In April, the unemployment rate edged up to 4.2% (c: 4.0%: p: 4.0%). in March, retail sales rose by 0.7% m-o-m (c: 0.3%: p: 0.9%).
Financial Markets: Stock Prices Fell; US Bond Yields Increased; Dollar And Gold Prices Increased, While Oil Prices Edged Down
Market Drivers: Stock indexes were down last week due to the worries about Middle East tensions and the potential for prolonged high U.S. interest rates dampening investor sentiment. Strong economic data raised concerns that the Fed might delay interest rate cuts until autumn or even 2025. Fed officials expressed the same concern, as a result of which the UST yields edged up.
Global Equities: Decreased w-o-w (MSCI ACWI, -2.9%, to 743.28). The US S&P 500 index edged down (-3.0% w-o-w, to 4,967.23). In the EZ, share prices fell (Eurostoxx 50, -0.8% w-o-w, to 4,917.55). In EMs, equity prices decreased (MSCI EMs, -3.6%, to 1,004.17). Volatility rose to 17.80 (VIX S&P 500, 52w avg.: 20.9; 10y avg.: 17.6).
Fixed Income: w-o-w, the 10-year US Treasury increased (+10 bps to 4.62%). The 2-year US Treasury yields increased (+10 bps to 4.99%). The German 10-year bund yields increased (+14 bps to 2.50%).
FX: w-o-w, the US Dollar Index increased (DXY, +0.1%, to 106.12;EUR/USD +0.1%, to 1.07). In EMs, currencies edged down (MSCI EM Currency Index, -0.3%w-o-w, to 1,710.46).
Commodities: w-o-w, oil prices decreased (Brent, -3.4% to 87.38 USD/b). Gold prices rose w-o-w (+1.4% to 2,406.7 USD/Oz).
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