Tuesday 20th February 2018
February 19th 2018: Michael van Dulken and Henry Croft at Accendo Markets report this morning that FTSE 100 Index called to open +15pts at 7310, still in a bearish rising wedge pattern, but at least now 7300, making a bullish challenge on 6/7 Feb highs of 7315 overnight, retracing more of that early month sell-off and breakdown. Bulls still need a break above 7325 overnight highs. Bears need to see 1-week rising support at 7300 in jeopardy. Watch levels: Bullish 7325, Bearish 7300. Calls for a positive start to the week come as Asian equities (excl. China and Hong Kong for Lunar New Year) built on last week’s global recovery, even if Wall St closed well off highs (Mueller Russia indictments) to close mixed on Friday into a long Presidents’ Day weekend that is likely to sap volumes today. FTSE is supported by the USD off three-year lows, helping GBP edge further from last week’s highs to offer less resistance for UK blue chips. Note Australia’s ASX higher, but miners in the red, as copper and gold trade off their highs, and despite oil trending higher -RWC Partners says Pierre Giannini will be joining the organisation as part of the ongoing growth RWC sees in Continental Europe. Giannini previously led Daiwa SB Investment’s business development efforts in Southern and Western Europe, where he focused on both institutional and wholesale channels - John Hardy, head of FX Strategy at Saxo Bank says in a client note this morning says, “The US treasury market faces an important test this week with three large auctions of 2-year, 5-year and 7-year treasuries on Tuesday through Thursday and the latest FOMC minutes on Wednesday. The big surprise many noted last week was the fresh highs in US yields failing to derail the ongoing equity market recovery. On the currency side, the narrative is that the US dollar can continue to fall as US interest rates rise because the rise in US yields reflects concerns on the US fiscal/current account balance sheet more than it reflects a strengthening US economy. The US 10-year benchmark came within hailing distance of the huge 3% level last week, widely considered a critical structural chart point – it is hard to believe, last week’s action notwithstanding, that a persistent rise above this level would be met with a shoulder shrug by asset markets, from equities to EM. The most interesting development this week would be strong US treasury auctions that see a sharp drop in US yields as a test of the recent weak USD trend - Aquaterra Energy, the offshore engineering solutions provider, has appointed Christian Berven as business development director, as it strengthens its EMEA operations by opening offices in Stavanger, Norway. Headquartered in Norwich, Aquaterra Energy UK, was the first to secure a multimillion pound investment from EV Private Equity, as part of its pledge last year to support fast-growing North Sea businesses. EV’s investment supports Aquaterra Energy’s global growth strategy and allows it to invest in capex. Berven joins the company following ten years as managing director of Norwegian oil service company, Toolserv - Alliance Etiquettes has merged with wine labeler Groupe Etienne. This is the sixth build-up for the Alliance Etiquettes “buy-and-build” platform created in 2015. Following the operation, Alliance Etiquettes will become the market leader in France of premium wine bottle labels, with turnover of €50m -- SendGold, a Gold-as-a-Service app that enables physical gold investment and payments in a digital environment, will launch its app in March in Singapore.. With the growing demand for gold across Asia, SendGold changes the way consumers can transact gold by allowing the user not only to buy and sell gold but also to send it as a payment or gift to friends or family members via their mobile devices, targeting the 2bn millennials who are in control of 16% of Asia Pacific's wealth -

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Patrick Artus

Patrick Artus

A graduate of Ecole Polytechnique, of Ecole Nationale de la Statistique et de l'Adminstration Economique and of Institut d'Etudes Politiques de Paris, Patrick Artus is today the Chief Economist at Natixis. He began his career in 1975 where his work included economic forecasting and modelisation. He then worked at the Economics Department of the OECD (1980), before becoming Head of Research at the ENSAE. Thereafter, Patrick taught seminars on research at Paris Dauphine (1982) and was Professor at a number of Universities (including Dauphine, ENSAE, Centre des Hautes Etudes de l'Armement, Ecole Nationale des Ponts et Chaussées and HEC Lausanne).

Patrick is now Professor of Economics at University Paris I Panthéon-Sorbonne. He combines these responsibilities with his research work at Natixis. Patrick was awarded "Best Economist of the year 1996" by the "Nouvel Economiste", and today is a member of the council of economic advisors to the French Prime Minister. He is also a board member at Total and Ipsos.

Website URL: http://cib.natixis.com/research/economic.aspx

Accusations of ‘laxity’ have been aimed at central banks such as the US Federal Reserve, the European Central Bank and the Bank of England for the years 2002-2007. The central banks have been criticised for allowing real estate prices and the size of risky asset markets to rise without counter measures – probably due to low levels of inflation – and for being permissive about debt.

Thursday, 20 March 2014 16:36

What are the implications of external debt?

It’s always hoped that external debt will stimulate economic growth, but as large indebted OECD countries increase their external commitments year on year, it’s time to review the results. While Germany and Japan have substantial external assets, the USA, UK, Spain, Italy and France have significant net external debts – but has such a strategy paid off?


Liquidity is at the root of financial crises; increasingly large capital flows are invested in certain assets – causing an overvaluation of their prices – then are suddenly withdrawn, triggering a crisis. The severity of a financial crisis increases with global liquidity, which is growing rapidly.

It is difficult to tell who is headed for the next financial crisis, since equities and real estate are not yet markedly overvalued, but the UK is a very probable candidate. The gap between the economy’s growth in demand and growth in supply has caused a rapid increase in its external deficit – a traditional cause of crises.

Yet Spain, Italy and Portugal are also possibilities, thanks mainly to massive capital inflows coinciding with deteriorating public and private borrower solvency. Japan, too, might find itself in trouble as low yields on the yen, and the currency’s depreciation, increase the risk of huge capital exports.

Friday, 28 February 2014 16:01

Where is the UK and US recovery in supply?

Household demand in the US and UK recovered sharply in 2013, propelled by highly expansionary monetary policies. The subsequent pick-up in growth may well run out of steam, however, unless a significant upturn in supply materialises.

Indeed, if demand continues to recover but the supply of goods and services remains stagnant, the labour market will come under pressure. At the same time, the level of imports would be deliberately increased in order to meet domestic demand, potentially leading to a deterioration in foreign trade, with knock-on effects for the USD and GBP.

Given the likely impact on the financial markets, we need to look for signs of rising supply in investment, productivity and participation rates in both these countries.


Since 2011, there have been several dramatic reversals in capital flows to emerging markets. And this has heightened market concern over the possibility of a balance of payments crisis, similar to that seen across South-East Asia in the 1990s.


Based on the eurozone’s growth shortfall, most forecasts point to the euro depreciating against the dollar this year. But the possibility of a strengthened euro shouldn’t be pushed completely from investors’ minds.

Indeed, if the eurozone's external surplus continues to rise – leading to amplified deflationary pressures, an increase in real interest rates and an underperformance by European equities – the chance of the euro appreciating is heightened, not least as the European Central Bank persists in conducting a significantly more restrictive monetary policy than other leading central banks.

Accordingly, let’s explore the finer details at play here, and reflect on the consequences of a stronger euro.


The US and eurozone’s highly expansionary monetary policies have been the centre of considerable market discussion, both for and against – but one undeniably positive effect has been the substantial boost in the prices of equities and corporate bonds.

There is now growing market concern, however, regarding the risk of excess liquidity flooding the markets – particularly if such liquidity is not justified by a corresponding pick-up in economic growth.

With this is mind, let’s compare the effects of expansionary monetary policies in the US and eurozone – and identify which market is more likely to develop such a liquidity “bubble”. 


As the new year unfolds, it is undeniably difficult to predict the economic outlook of the US, UK, Japan and China – in particular the strength of their respective recoveries. Following 2013’s instability, the same uncertainty applies when analysing the extent of economic weakness in large emerging countries. And in the eurozone, a raft of institutional and structural problems hinders any real gauge of the region’s prospects. So what can we expect in 2014?