May, 30 2017 by lsr team

Christopher Granville explains why there needs to be a Brexit Plan B.
Highlights:
- UK Brexit negotiation process creates economic risk
- The UK government may or may not be able to deliver ‘Plan A’
- Businesses need a credible Plan B before the end of 2017
- Failure to set out the alternative will see investment collapse

May, 04 2017 by lsr team

China remains the key country as far as future gas demand growth is concerned. However, countries such as India and Pakistan as well as South East Asia are emerging as other major sources of demand. With global gas markets changing and becoming increasingly liberalized, LNG is set to dominate supplies into the Asian market.

March, 09 2017 by lsr team

Xi Jinping promised in November 2015, that the economy would grow at 6.5% through to 2020. This was necessary, he said, to fulfill a promise by his predecessor, Hu Jintao, to double the 2010 GDP and per capita income by the end of the decade. However, over the past year, there have been several signs that Xi might be willing to back away from this pledge. After recent conversations in Beijing, we believe:
• Policymakers will accept growth below 6.5% from next year. 
• The change responds to a wide-scale recognition that the current rapid pace of...

February, 10 2017 by lsr team

- Trade dispute with US to peak in 12 months - Trump deal could be 45% tariff on "non-essential" goods - Chinese trade surplus to fall from 2018 - RMB policy will be undermined - FDI will decline and then retreat

October, 21 2016 by lsr team

Some claim a US recession is ‘overdue’, but leading indicators are edging higher and we are not seeing the macro imbalances typically associated with major downturns. Rising bond yields and a correction in equity markets provide the clearest 2017 threats, while corporate indebtedness could compound these risks.

October, 14 2016 by lsr team

The euro area LI continues to put in an above consensus call. It is probably over predicting growth somewhat but its strength is fundamentally underpinned by the newly emerged German locomotive. While German demand often turns out to be derived from others, chiefly China, in this case it is genuine. In fact, this is highlighted by our below consensus Australia call. China’s stimulus has not fed through to a rebound in private demand, although easing PPI deflation is helping manufacturers.

August, 26 2016 by lsr team

Euro area GDP was a tad disappointing in Q2 but, overall, European data remain solid. We expect above-trend growth (1½%) over the next 12 months, although at a marginally slower pace. Spain has been outperforming the rest of the region while Italy remains the laggard, a trend that is likely to continue. To find out more, click above to watch the video or below for the full report.

August, 19 2016 by lsr team

In previous notes we have stressed how important supply-side rebalancing is for the success of China’s demand side revolution. Beijing’s longer-term intention is clear: it aims to proceed with supply-side reforms.  But what would happen to the labour market if Beijing went for a full blown, Austrian-style rebalancing of the supply side? What if they allowed failures to go under and ailing firms to restructure in a market-oriented way? How many jobs would be under threat from such a process? Click above to watch the full video or below for the full report...

February, 29 2016 by lsr team

Shweta Singh, senior economist at Lombard Street Research, discusses the new budget that caters to the rural sector of the economy. Click below to watch the full video on CNBC.

February, 17 2016 by lsr team

Beijing has pledged to embark on the necessary reforms to lower debt levels in the economy. Yet the latest money and credit numbers show that Chinese banks expanded their loan books at a record pace at the start of 2016. In January, Chinese banks extended a whopping RMB2.5 trillion in new loans, or 4% of GDP. On a seasonally adjusted basis, RMB 1.6 trillion new loans were extended. Given that local government bond issuance has come to a halt ahead of a new debt swap programme, local government financing companies might have taken out bridge loans from banks to refinance...

February, 15 2016 by lsr team

The UK cycle is rapidly maturing. We have stressed before that uncertainty over Brexit is likely to add a burden to the end of the cycle, dampening investment intentions just when consumption bottlenecks would otherwise have driven up capex. As with the Scottish referendum, polls have narrowed. The latest poll of polls put those who want to remain in the EU on 51%, with those who wish to leave on 49%. Many of those who expect an exit presumably think it would be a good thing. But in the short term, uncertainty over how Brexit would affect trade and capital flows will tak...

January, 25 2016 by lsr team

Markets are jittery and the latest manufacturing data, both from the US and the wider global economy, are doing nothing to restore confidence. Last week’s plunge in the Empire State index confirms a trend that has been apparent for some time – global industry is struggling. Since manufacturing has often been reliable guidance to near-term macro trends, investors are understandably worried. It is no coincidence, for example, that industrial data play a dominant role in the OECD’s leading indicators. So why are manufacturers struggling? More importantly,...

December, 09 2015 by lsr team

Twelve months ago we said 2015 would be a year of ‘deceptive calm’. With the S&P 500 up 5% and US 10-year yields around 5bps higher, you could say our forecast was accurate. Markets spent much of the year in an anxious state, fretting about Greece, then China, then the risk of a synchronised global recession. In 2006 and 2007, LSR had a high conviction that a financial meltdown was about to wreak havoc on the global economy. This time around we stick with our 2015 theme ‘Keep Dancing’ but with no great conviction. Looking ahead to 2016, China...

October, 22 2015 by lsr team

The Trans Pacific Partnership is publicly touted in Japan as a boon for exporters, but a well-designed FTA should be geared towards households. The chief gains from free trade typically arise from tougher import competition. The aim of an FTA in Japan should be to increase the efficiency of goods and services provision so that consumers benefit from a more competitively priced product while workers earn more thanks to improved productivity. That’s a heady ideal, and in practice it doesn’t always work like this. The report below examines two key issues: 1) to...