UK MPC money supply indifference risks policy mistake

Money supply analysis plays no role in policy formation under the current Monetary Policy Committee (MPC). Historically, policy-makers have run into trouble when they have ignored money and credit trends. Broad liquidity of households and non-financial firms is currently growing at the fastest rate since 2008. The velocity of circulation, meanwhile, has been stable in […]

18 October 2015 by Simon Ward

Economy

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Global growth: business surveys supporting H2 pick-up

Previous posts suggested that global economic growth would revive from mid-2015, reflecting stronger developed-world demand following a pick-up in real money expansion in late 2014 / early 2015. Incoming business survey results are consistent with this forecast. The first chart shows a selection of developed-country manufacturing survey indicators for which a July reading is available. […]

2 August 2015 by Simon Ward

Economy

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UK Budget: big changes, few winners

The big story of the Budget is a dramatic reduction in the squeeze on departmental spending. The Chancellor made room for less spending restraint by cutting deep into the welfare budget and raising taxes significantly. He also allowed his borrowing targets to slip again. The fiscal stance over the next two years is less restrictive […]

9 July 2015 by Simon Ward

Economy

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US / UK labour cost pick-up opening door to rate rises

The best measure of US average wages is the quarterly employment cost index (ECI), which adjusts for job shifts between occupations and industries. Annual growth in ECI wages rose to 2.5% in the first quarter of 2015, the fastest since 2008. The historical relationship with the job openings or vacancies rate had signalled a pick-up […]

6 May 2015 by Simon Ward

Economy

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China’s vast savings are being encouraged to move out of cash and housing and into capital markets

Unlike 2007 and 2009 the rally in Chinese markets does not appear to be a function of loose monetary policy. Despite recent cuts, monetary policy in China remains tight, suggesting  still more room for manoeuvre. Meanwhile fiscal stimulus through the ‘One Road, One Belt’ policy is continuing with announcements last week on direct investment into […]

27 April 2015 by Mark Tinker

Economy

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Eurozone news still surprising positively

The ECB’s April bank lending survey, released today, provides further confirmation of a strong economic pick-up. Credit demand, in particular, is surging: the net percentages of banks expecting increased demand for corporate and house purchase loans over the next three months rose to the highest levels recorded in the survey’s 12-year history – see first […]

14 April 2015 by Simon Ward

Economy

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Track record – What value lessons can be learned from a century of decline in the rail industry?

By Nick Kirrage We recently focused on the shifting nature of stockmarket indices in Only fools and bourses – along the way name checking an unlikely combination of a girl band, a sitcom character and a First Century philosopher. Let’s build on that now with the assistance of a rather more financially conventional triumvirate – Elroy […]

4 April 2015 by The Value Perspective

Economy

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What can we expect from this pre-election Budget?

It’s almost here.  The Chancellor, George Osborne, will deliver his last coalition budget before the general election in May to Parliament this Wednesday 18 March 2015. He has now built something of a reputation for using such occasions to introduce truly major reforms.  We have had the ‘pension revolution’ in last year’s budget allowing anyone […]

17 March 2015 by Lee Robertson

Economy

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US money trends signalling H2 growth rebound

A post in September noted that US narrow money growth had fallen sharply and was signalling a loss of economic momentum in early 2015, allowing for the usual lag. US economic news has mostly disappointed recently, reflected in a significant negative reading of the Citigroup US data surprise index, while the Atlanta Fed’s “nowcast” model […]

8 March 2015 by Simon Ward

Economy

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