· Globally this was one of the quietest weeks for four months, with the number of shocks and surprises roughly what you’d expect from a ‘normal’ distribution. This newsflow should force no change in views or forecasts. But notice that over the last six weeks, the trend has turned net positive for the first time since mid-April.
· In every region, financial caution is rising fast. This cuts present industrial demand whilst channelling cash into banking systems (bad for equities & commodities, good for bonds and financials).
· The key short-term issue is how fast production schedules and inventory channels need to adapt (ie, how out of equilibrium they find themselves). The medium-term question is the extent to which this slows capex growth and labour market strength. In both cases, the answers are likely to come from the US and Germany.
This is an extract from a weekly four-page publication "Global Shocks & Surprises" which summarises developments in US, Asia and Europe, and draws out the key messages from the data in a concise form. If you wish to take a look at this please email me at firstname.lastname@example.org