The Fed’s July senior loan officer survey signals a major slowdown in US bank lending in H2 and 2023. Most commentary focuses on survey responses about credit standards and demand for commercial and industrial (C&I) loans. However, the Fed calculates aggregate indicators incorporating data for all loan categories (i.e. also including commercial real estate (CRE), consumer and residential mortgages). These indicators weakened sharply in Q2*, moving below their averages since 1995 – see chart 1. Chart 1 Demand for residential mortgages […]

Central bankers have ignored the lessons of their 2020-21 policy blunder and deserve the opprobrium they are likely to attract as an economic debacle continues to play out over coming quarters. Policy-making can be accurately described as anti-monetarist, not merely in the sense that money data are ignored but rather that decisions are the precise opposite of those warranted by monetary trends. The central banks continued to pursue ludicrously outsized QE in 2020-21 even as money growth surged to a level that […]

In this week’s commentary we discuss how the alchemy of art and science that goes into gardening is similar to Global Alpha’s investment philosophy.

Connor, Clark & Lunn Infrastructure (« CC&L Infrastructure ») et le Régime de rentes du Mouvement Desjardins, représentés par Desjardins Gestion internationale d’actifs (collectivement, « Desjardins »), sont heureux d’annoncer l’acquisition d’une participation majoritaire dans la Promenade Herb Gray (le « projet » ou la « Promenade »), d’ACS Infrastructure Canada (« ACS »), de Fluor Canada Ltd. (« Fluor ») et d’Acciona Concesiones S.L. (« Acciona »). ACS, Fluor et Acciona conserveront une participation minoritaire, et une société d’exploitation […]

The assessment of global economic prospects here has been consistently more pessimistic than that of the consensus in recent quarters. The consensus is now shifting to acceptance of US / European recessions but these are widely expected to be “mild” and / or “short-lived”. The view here remains bleaker, based on three considerations. First, global six-month real narrow money momentum continued to weaken during H1 2022, reaching a level historically associated with serious recessions. The further decline into mid-year suggests no economic […]

Chinese monetary data for June confirm that policy easing is gaining traction but narrow money growth remains modest compared with previous reflationary episodes and a H2 economic recovery is likely to be dampened by weaker exports. GDP fell by 2.6% between Q1 and Q2 but monthly activity data indicate a significant recovery from an April trough, with June exports and retail sales particularly strong – see chart 1. Chart 1 Six-month growth rates of narrow and broad money, meanwhile, rose further […]

We discuss Germany’s reduced gas supplies and its impact on our Germany holdings. The Emergency Plan for Gas for the Federal Republic of Germany was published in September 2019.

Les marchés ont inscrit des rendements décevants cette année, en raison des cycles de resserrement qui entraîneront un raffermissement de la politique monétaire. Plus récemment, toutefois, les marchés se sont redressés, dans l’anticipation d’une récession qui freinerait le resserrement monétaire des banques centrales. Les investisseurs semblent accueillir favorablement le scénario d’une récession, car ils estiment que les interventions des banques centrales permettront de saper l’inflation et de renouer avec un contexte de faible croissance et de faibles taux. Mais à quoi pouvons-nous nous attendre si ces interventions ne suffisent pas à juguler l’inflation? Les autorités monétaires devraient composer avec des scénarios peu souhaitables. Nous expliquons ces scénarios plus en détail, car à notre avis, même si ces deux situations sont improbables, elles ne sont pas pour autant invraisemblables.

A fall in global six-month real narrow money momentum below zero in March signalled a shift in the economic outlook from slowdown to recession. A subsequent further decline in momentum to its weakest since 1980 suggests a deep recession extending into Q1 2023, at least. Economic contraction will release liquidity for markets, with “safe” bonds and quality stocks possible beneficiaries. Chinese real money momentum is diverging positively, supporting relative economic / equity market prospects. Global (i.e. G7 plus E7) six-month […]

We discuss the fears of a potential recession as investor behavior has shifted from ‘buy the dip’ during the pandemic to ‘sell the rally’.

There are three messages from Eurozone monetary data for May released yesterday. The region faces a major recession that is likely to extend into early 2023, at least. Economic prospects are at least as bad for core countries as for the periphery. Nominal monetary trends are consistent with inflation returning to – or falling below – the 2% target in 2023-24, arguing for an immediate suspension of ECB tightening plans. The “best” monetary leading indicator of Eurozone GDP, according to ECB research, is […]

Economic “optimists” argue that UK / US recessions will be avoided because households and firms have accumulated a “war chest” of excess monetary savings that will be deployed to support spending. The assessment here is that high inflation is rapidly eroding excess money balances while households / firms are unlikely to reduce precautionary savings against a backdrop of deteriorating economic / financial conditions. Chart 1 is a recreation of one used to support the optimistic case. The suggestion is that UK […]

Shorter-term leading indicators are confirming the negative signal for US economic prospects from monetary trends. An independent calculation of the OECD’s US composite leading indicator suggests another fall in the indicator in June along with upward revisions to declines in prior months – see chart 1. Chart 1 The indicator is calculated as a ratio to trend, i.e. a decline indicates that output will lag its trend rate of growth. The extent of the shortfall should be related to the speed […]

Nous approchons du milieu de 2022, une année qui s’est révélée difficile pour presque toutes les catégories d’actif. Étant donné le contexte macroéconomique, on s’explique bien les fluctuations des marchés qui sont ébranlés par les cycles de resserrement de la banque centrale, les ralentissements qui en découlent (et le spectre d’une récession), ainsi que l’inflation élevée. Or, les marchés n’anticipent pas encore une récession. Certains signes, notamment la résilience des prévisions de bénéfices et l’inversion de la courbe des taux qui a été de courte durée jusqu’à présent, ne laissent pas encore présager une récession imminente. Pour le reste de l’année, nous ne prévoyons pas de récession, mais nous demeurons prudents quant aux risques de ralentissement de l’activité économique et de ses effets sur les actifs risqués.

We discuss the how travel-exposed names will benefit from the summer vacation tailwinds. As the first official day of the summer approaches, it finally feels like the world is getting back to normal.