From their Head of Macro Research, Elga Bartsch at BlackRock's blog, October 1:
Elga explains why we see a growth pickup looming on the horizon. Hint: Watch the transmission of financial conditions.An expected dovish pivot by central banks has materialized. Now what? Financial conditions in key developed economies have become more accommodative as a result, even though the lift to the broader economy has yet to kick in. We see policy easing helping sustain the economic expansion–and the likelihood of a growth pickup over the next six to 12 months. This supports our moderate pro-risk stance. Yet it could be a bumpy ride due to the persistent uncertainty from protectionist policies.
Growth expectations for key developed economies have faltered since 2018, as indicated by our BlackRock Growth GPS for G3 economies (the U.S., Japan and euro area). Financial conditions have eased in recent months in these economies thanks to policy easing, according to our Financial Conditions Indicator (FCI). The historical relationship between our FCI and GPS points to potential for a growth pickup in the coming six months. Some pockets of the economy that are more sensitive to interest rates appear to be slowly responding to easier financial conditions: In the U.S., the housing market appears to have turned a corner and auto sales have held up. In the euro area, machinery investment rebounded. But easier financial conditions have yet to support a broader economic recovery........MORE
She goes on to say they expect one more quarter of contraction in Germany and foresees no comprehensive China - U.S. trade deal.
Keep in mind this was five days before China's announcement that it would not entertain a "broad trade deal", specifically:
"an offer to Washington that won’t include commitments on reforming Chinese industrial policy or the government subsidies that have been the target of longstanding U.S. complaints".Pretty good call on the part of Dr. Bartsch.
—Bloomberg via Singapore's Straits Times:
The Chinese move should not have come as a surprise after China's proxy/client, chubby little rocket dude set one off a few days ago and with great rhetorical flourish canceled the upcoming nuke talks:
"The US raised expectations and offered suggestions like flexible approach, new methods and creative solutions but they have disappointed us greatly, and dampened our enthusiasm for negotiations by bringing nothing to the negotiation table," Kim Myong Gil said.
— lead negotiator Kim Myong Gil via AFP
