 RGE Daily Top 5 North America Weekly: U.S.: President Obama’s Jobs Program and Upside Risks; Canada: Slowing Employment Momentum By Prajakta Bhide and Tetiana Sears: Relative to our baseline assumptions, Obama's proposed jobs program could boost the growth outlook by an additional 1.5%, alleviating the fiscal drag penciled in for 2012, but only if passed in entirety. Thus, the proposals are not sufficient to have a significant net positive stimulus impact in 2012. Canadian employment registered a 5,500 decline in August, in contrast to market expectations for a 21,500 gain. While the weak headline figure masks some positive details—full-time employment continued to grow, partly offsetting losses in part-time jobs and self-employment—the overall trend shows softened momentum. Read more LatAm Weekly: Monetary Policy in Brazil, Mexico, Chile and Peru; Economic Activity in Argentina; Politics in Mexico By Juan Lorenzo Maldonado, Bianca Taylor and Maria Jose Hernandez: We interpret the latest COPOM meeting minutes to mean that the committee is now effectively operating under the model laid out in its Q2 2011 inflation report, cutting the base rate to depreciate the BRL while using reserve requirements to weaken domestic demand pressures. The minutes from Banxico's August 26 meeting show commitment to holding rates constant, at least in the short term, although with a downward bias. Argentina's monthly economic indicator index points to a Q2 GDP growth rate of about 7.8% y/y, but we will be interested to see if there is another discrepancy between the monthly and quarterly data. Chile's central bank will likely continue to stay on hold at its September 15 meeting—it is unlikely that Chile will restart rate hikes; rather, it will reverse the policy cycle toward monetary easing in the near future. We expect to see that Peru’s economic activity, supported by recovery in the agriculture sector and resilience in the commerce sector, accelerated to around 7.0% y/y in July. Read more UK: ICB Proposes Radical Reforms for the Banking System As expected, the Independent Commission on Banking's final report announced ring-fencing of consumer deposits and small business lending from other noncore aspects of banks' operations, notably investment banking. UK banks argue they will face a competitive disadvantage until their EZ peers come up to speed on regulation and financial stability initiatives, given higher costs from greater compliance burdens, lower revenues from tighter liquidity criteria and higher credit costs from reduced implied support. However, this is a small price to pay for enhanced systemic stability. Read more Turkish Economy Expands 8.8% y/y in Q2; When Will Growth Decelerate? Led by robust domestic demand, Turkish growth in Q2 (8.8% y/y, 1.3% q/q) exceeded RGE and consensus expectations. Given this and the revisions to Q1 GDP, we expect Turkey's economy to grow over 7% in 2011, with a more pronounced slowdown in H2 as credit growth eases and concerns over the eurozone and global growth prospects lead to moderation in fixed investment and consumption. The composition of growth remains worrying, and the buildup of external imbalances will take time to reverse. Read more Australia Outlook Update: Hollowing Out By Mikka Pineda: Coal production will fully recover and Japanese demand for raw materials will pick up in 2012, supporting a rebound in net exports from their flood-induced contraction in 2011. Currency appreciation will widen growth disparities between the prosperous mining-related sectors and the languishing nonmining economy, by exposing the latter to more foreign competition. Due to high household debt and wealth shocks from market volatility, consumption will normalize at a lower level than during the previous commodity boom. Read more |
ROUBINI GLOBAL ECONOMICS: OUTLOOK FOR TUESDAY, SEPTEMBER 13, 2011 CALLS FOR GLOBAL STALLING...WITH A FEW EXCEPTIONS...ROUBINI NOT AS GLOOMY AS NORMAL...
