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The 2008 crisis was deadly because it centred on housing and global banking. The financial system is less vulnerble today. While another crash isn't imminent, elevated asset prices provide the main threat. For the macro economy, this probably resemble dotcom rather than subprime. But watch for amplification risks.READ ME
Goldman Sachs expected WTI to rise to $57.50pb in H1 with OPEC cuts factored into the forecast.
In the near term, the balance of risks for oil prices looks skewed to the downside. Positioning is stretched. Speculative WTI longs are hovering at record highs and producer hedging has increased markedly over the last two months. Oil price volatility remains depressed, but is bound to creep higher as the global inventory overhang recedes, OPEC compliance is already in the price and the market begins to shift its focus to demand. (LSR Daily Note 24th January 2017)
WTI rose modestly from $53.18pb at time of publication to peak at $53.99pb on 24th February. By 9th March the price had fallen back to $50.28pb.
Oil price collapse will hit US growth through falling capex in shale, oil and other sectors. Some commentators suggested that job creation in shale fracking had been the only driver of employment. Fear growing that a rise in the USD would hit S&P earnings and capex hard.
The timing effects of the oil and commodity price collapse - pain first, gain later - have taken longer than in 1986...but the consumer-led growth will come through. The dollar will be protected from undue appreciation as the real Chinese exchange rate falls, by buoyuancy of the euro (also the yen) as real incomes support European consumer growth: the euro's past depreciation, with an already huge trade surplus, boosts current and real-asset capital flows. (LSR View 29th February 2016)
US growth stable at 2-2.5% through 2016 following a weather related soft patch in Q1. USD index (DXY) ranged around 95 from March to October and only jumped to 100 in November following Trump election victory and re-pricing of inflation expectations.
An oil price rally is further away than at any time since 2014. $40p/b should hold in the medium-term level as oversupply is reduced. Further declines are the main risk in the short-term but any move lower would trigger production cuts and so would be brief. (LSR View 3rd November 2015)
WTI (NYMEX) fell from $45p/b in Nov 2015, bottoming out at $29p/b in Jan 2016 and range trading between $40p/b and $50p/b for the rest of the year.
Negative interest rates are a mistake in Japan. Today's announcement could prove critical in the currency war. China's announcement that they will target a basket of currencies is for real this time and the yen is roughly 15% of that basket. The euro is a further 21% and BoJ aggression will heap pressure on the ECB to act in March. With all the other major central banks looking to devalue, the risk of ever greater USD strength means it will now be difficult for the Fed to send a strong message on the health of the economy by hiking rates in March. (LSR Daily Note 29th January 2016)
ECB cut rates and expanded QE programme on 10th March, Fed did not hike.
Some commentators were forecasting a recession amid concern that China's slowdown would drag the world down with it and citing falling commodity prices as a re-pricing of growth expectations. Early January saw the yuan fall and risk assets drop on fears of rising global deflation.
China to keep growing around 3-5% in 2016. This is good news for the global economy. Resulting lower commodity prices boost consumer incomes and can unleash capex in the West. 2016 should see US growth of 2.5-3% and a stronger dollar while the euro area grows at an above-trend 1.5%. We expect further painful rebalancing, financial market volatility and EM pain, but not a global recession. (LSR View 3rd December 2015)
Global growth became more stable and secure in the US, UK and euro area with consumers and businesses regaining confidence. Chinese growth stabilized around 4% on LSR numbers and PPI turned positive. Deflationary pressure eased through the year and markets re-focussed on the return of inflation risk and rates.
Investors becoming more concerned about US earnings and frothy valuations
Q3 S&P earnings, seasonally adjusted, could be up handsomely despite a significant rise in the dollar as EM currencies weaken. The profit recovery in the US and Western Europe has further to go. (LSR Daily Note 27th October 2015)
S&P 500 rose from 2080 at time of writing to 2141 12 months on and continued to set record highs through December 2016.
Charles Dumas joined TS Lombard in 1998, becoming Chief Economist in 2005. He is recognised as one of the world’s leading macroeconomic forecasters. He has written several books on the global economy, including ‘Globalisation Fractures’ (2010), which earned praise from Bank of England Governor Mervyn King: “To understand the causes of the financial crisis, read this insightful analysis.”
Charles has 40 years’ experience as an economist and financial markets professional. In the 1980s he was Head of Research for JP Morgan in London. In the 1970s he was Director of European Economics for General Motors.
Before that he worked on tax reform for the Conservative Party and as a journalist on The Economist newspaper. He was a Managing Director in JP Morgan's New York M&A department from 1988 to 1992 and had previously worked in its capital markets group in New York and London.
Economist, Latin America
Cristobal joined the company in 2017 as an economist covering emerging markets with a focus on Latin America. He previously worked at BMI Research, a unit of Fitch Group, where he developed the data mining and economic modelling capability for the global research team. His experience also includes positions in the public sector as an economic and financial analyst in Mexico and Malta.
Cristobal holds an M.Sc. in Economic Theory from ITAM, and an M.Res. in Economics with Distinction from University College London. He is also reading towards a Post-graduate Diploma in Finance at the LSE.
Managing Director, Global Macro, Chief US Economist
Steven joined the company in 2017. His professional experience as economist and portfolio manager began in the late 1970s.
It includes econometric modelling at Data Resources Inc., creating interest rate and FX derivatives strategies at Salomon Brothers, managing US and global fixed-income portfolios at OFFITBANK, being global head of fixed-income at Lazard Asset Management and, more recently, as Chief Economist at M Science he developed “big data” to underpin his analysis of the economy, central bank policies, and capital market pricing.
Aside from his extensive client-facing work, Steve is a well-known commentator on economic and financial issues, is frequently quoted in the financial press, appearing on TV and radio, and writing guest columns for financial publications.
Chief Economist, Emerging Markets
Larry has more than 35 years’ experience as an international economist and investment strategist working for major global financial institutions. Larry was a co-founder of Trusted Sources in 2007. He looks at cross-EM and macro strategy themes, identifying major global trends that originate in and/or impact on emerging economies. He was co-head of Emerging Debt Markets at Goldman Sachs before becoming global head of Emerging Market Research at Chase Manhattan Bank.
During the 1980s he was the head of economic committees responsible for advising creditor banks on restructuring the sovereign debt of Mexico, Brazil, Poland, Yugoslavia and Nigeria. Throughout his career Larry has focused on emerging markets, especially Brazil, China and Russia. He received a PhD in economics from the University of Chicago.
Michelle Lam joined TS Lombard as an Economist in January 2014.
She is based in our Hong Kong office and focusses on China and the UK. She previously spent two years in the Market Economics division of BNP Paribas in London where she provided support to a team of European economists and helped analyse topical financial market issues.
Michelle earned a first-class honours degree in Economics from UCL in 2010. She continued her interest in Macroeconomics at Cambridge University where she obtained an M.Phil. degree in 2011. Her dissertation focuses on measuring the impact of economic data surprises on inflation expectations.
Davide joined the TS Lombard Macro team in January 2017 to provide support to the economists in developing the Global Leading Indicators and creating new publications. Prior to this, Davide spent a year and a half working for the Securities and Finance practice of NERA Economic Consulting in London, where he focussed on asset pricing. Davide graduated in Economics from Bocconi University in 2013, holds a M.Sc. in Economics and Management from the LSE and he is currently a CFA Level II candidate.
Managing Director, Global Macro
Dario Perkins joined the company in 2011 and is Managing Director, Global Macro. He covers a wide range of global macroeconomic themes and writes the fortnightly Macro Picture.
Dario has extensive experience as an economist in both the public and private sectors.
At the UK Treasury he co-ordinated Gordon Brown’s global economic forecasts and was responsible for designing the structure of the Bank of England’s Financial Policy Committee. He also produced an important review of the BoE following the 2008 crash.
At ABN AMRO he was the City’s top-rated European economist for three consecutive years, earning a reputation for his communication skills and central-bank forecasting record.
Director, India Research
Shumita Sharma Deveshwar joined TS Lombard in 2007. She is co-head of the India team based in New-Delhi and focuses on India’s macro-economy. Major research themes include India inflation and RBI policy. She travels regularly to different regions to take the pulse there.
Before joining TS Lombard, Shumita was the India economist for DSP Merrill Lynch in Mumbai. Previously, she reported on emerging markets, focusing on debt and macroeconomic issues, for Dow Jones Newswires in New York and covered the Indian economy for the same company from New Delhi. She completed her Master's degree in international relations at Yale University and has a Bachelor's degree in economics from Delhi University.
Senior Economist and Director, Global Macro
Shweta joined TS Lombard in 2011 and is Director, Global Macro. She is a senior global economist and specialises in the euro area. Shweta was also the company’s lead emerging markets (EM) economist.
Shweta started her career as a Researcher at the London School of Economics and Political Science (LSE). Before joining TS Lombard, she was an Economist at Morgan Stanley (MS) for four years in Mumbai and Singapore.
At MS, she was a member of the top-rated Asia Economics team (Institutional Investor Survey). She has also worked as a Researcher at the UN.
Shweta is a regular commentator in TV and print media. She holds an M.Sc. in Economics from the LSE. She is currently pursuing MSc. in Finance (part-time) from the London Business School.
Konstantinos Venetis joined TS Lombard in February 2015 as an economist. His coverage is global, with a focus on Japan and North Asia. He also publishes on oil and the industrial metal markets. He has well-rounded experience in financial markets, starting his career at Bear Stearns’ investment banking division and subsequently working as a trader, fund manager and research analyst.
Konstantinos holds an M.Phil. in Economics and a B.A. in Philosophy, Politics & Economics from Oxford University.
Managing Director, Global Macro
Ken joined TS Lombard in 2017, having been working as an economist in financial markets since the early 1990s, initially for HSBC and subsequently for BNP Paribas.
From 2000 onwards, he was the chief market economist for the euro area at BNP Paribas, contributing also to the forecasting and presenting of the bank’s views on key global economic and policy issues.
Ken also has emerging market experience, co-leading the coverage of Central and Eastern Europe, Middle East and Africa (CEEMEA) at BNP Paribas from 2012 onwards.
His high-profile ‘out of consensus’ calls include predicting as early as 2012 that persistent low inflation would prompt the European Central Bank to conduct large-scale sovereign debt purchases despite strong opposition within many euro area member states, including Germany.
A lead speaker at client seminars across a wide range of locations, Ken participates in panel events, including central bank monetary policy forums.
Chief Economist and Director, China Research
Bo Zhuang joined TS Lombard in 2007 as an economist and went to Beijing three years later to establish the TS Lombard office which he heads. In his analysis he draws on his local experience, extensive travel through China and a network of expert sources. He focuses on China’s growth transition and the way its top-down policies affect the real economy. The main themes he covers include the country’s political-business cycle, shadow banking, municipal bonds, SOE reform, local government debt and the labour market. He has successfully called macro-economic developments since 2008, including growth, deflation, currency, reform, non-bank finance and debt.
Bo has a Master’s degree in economics from the University of Warwick and a Bachelor’s degree in economics and management from the University of London.
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