Macroeconomics: The Day Ahead – 22 January 2021

Good Morning: The Long & the Short of it and The Bigger Picture

Written by Marc Ostwald, ADMISI’s Global Strategist & Chief Economist

  • Digesting Japan CPI, Australia & UK Retail Sales, UK PSNB, schedule dominated by ‘flash’ PMIs, ECB professional forecaster survey and US Existing Home Sales
  • G7 flash PMIs: Brexit potentially an additional drag for UK & Eurozone, beyond rising infection rates and lockdown measures, perhaps some upside risk for US Manufacturing; Dec ‘resilience’ set to fade
  • G7 central banks’ using economy and pandemic narrative to put thin veil over asset price bubble concerns


While the data schedule has a busy look to it, in all likelihood it will only be the ‘flash’ PMIs in the G7 and Australia that capture markets attention in any meaningful way, even if there are also UK, Australian and Canadian Retail Sales, UK PSNB and US Existing Home Sales to digest along the way. The events schedule has only the ECB’s survey of professional forecasters, while the US corporate earnings will likely find its focus on results from Ally Financial, Kansas City Southern, Schlumberger and Teradyne. Markets appear to be at something of a loss in where to look for inspiration in directional terms outside of the perennial TINA and FOMO memes, induced by central banks’ financial repression. The lesson from this week’s ECB, BoJ and BoC meetings, if one reads between the lines, is that the major central banks are in fact very concerned that their ultra-accommodative polices are blowing bubbles, which go far beyond their collective desire to ensure financial stability – they obviously cannot say this explicitly, but the message is very clearly there just below the surface. Next week’s schedule has numerous confidence surveys (including US Consumer Confidence and Germany’s Ifo) along with preliminary Q4 GDP readings from US, France, Germany and Spain, along with an FOMC meeting that is hardly heavily anticipated, and a sharp acceleration in the volume of US and other corporate earnings.


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