Global Data Pod

Global Data Pod Research Rap: Labor markets are tight but not healed

Bruce Kasman is joined by Joe Lupton and Nora Szentivanyi to discuss our recent research on the dramatic tightening underway in global labor markets. Both our DM and EM aggregates show unemployment rates approaching pre-pandemic levels at the end of 2021, an outcome that contrasts with a still-substantial shortfall in GDP. For both regions, this partly reflects pandemic-related disruptions to labor supply that have depressed participation rates. However, a number of other factors are at work. Demand has rotated toward higher-productivity sectors in the US while European policies have reduced the work week while preserving jobs. In EM, we believe the pandemic hit informal sectors unusually hard, reducing GDP in a manner not fully reflected in measured employment. Central banks across the globe are under increasing pressure to adjust policy in response to rapidly labor markets. For now, the DM central bank response will be limited by hopes that a fading of the pandemic might elicit stronger labor supply (US) and productivity (Euro area) growth. 

This podcast was recorded on February 9, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3990349-0 and www.jpmm.com/research/content/GPS-3993206-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Weekender: Three humble hawks walk into a bar

Featured in this podcast are Bruce Kasman and Joseph Lupton. Despite clear signs of growth slowing in response to the Omicron drag, the latest data reveal resilience in a number of areas including labor markets. This is keeping central banks focused on inflation and normalization. Last week’s hawkish Fed meeting was followed this week by hawkish meetings from the ECB and BoE. We add rate hikes to both for this year.

This podcast was recorded on February 4, 2022.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Japan: BoJ’s exit path and its impact on markets

Featured in this podcast are Hiroshi Ugai, Takafumi Yamawaki, and Benjamin Shatil. While other DM CBs are approaching liftoff, the BoJ will lag in the exit from easy monetary policy, reflecting that only Japan has no clear way to achieve 2% inflation target. That said, the inflation outlook is highly uncertain and the difference in policy direction between the BoJ and other DM CBs may move the financial markets. Under such conditions we discuss whether the BoJ has the possibility to start the process toward the exit, what would be the policy sequence toward the exit, and how it would impact markets. To conclude in advance, adjusting to YCC may come in 2023 as a risk scenario, while the hurdle for liftoff would be much higher. The next governor may put less weight on achieving the target, thereby advancing the move toward the exit. In a plausible risk scenario of adjustment to YCC the BoJ could allow the 10yr JGB yield to rise to 0.15%-0.30% in 2023, implying 1%-2% lower fair value for USD/JPY. Other scenarios with much lower probabilities would accelerate the rise in 10yr JGB yield and the decline in USD/JPY.

This podcast was recorded on Feb 3, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-3985451-0, https://www.jpmm.com/research/content/GPS-3976942-0 and https://www.jpmm.com/research/content/GPS-3972086-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Weekender: Fed up, growth down

Bruce Kasman is joined by Joseph Lupton to discuss how Chair Powell has sent a strong signal that this normalization cycle will prove different than the last and we now expect the FOMC to hike seven times (175bp) by the end of March 2023. This shift comes against the backdrop of a sharp slowing in US and global growth this quarter. To realize our Fed call, the Omicron drag needs to be short-lived and the threat posed by energy and agricultural supply shocks needs to pass unrealized. Looking beyond the start of the year, risks turn towards the transmission of Fed tightening to financial markets which has varied greatly over previous policy normalizations.

This podcast was recorded on January 28, 2022.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Research Rap: The Fed will not hold your hand

Bruce Kasman is joined by Jay Barry, Joe Lupton, and Michael Hanson to discuss today’s FOMC meeting and the path of policy normalization across the Developed Market economies. As expected, the FOMC laid the ground work for an expected March hike and mid-year start to QT. While Chair Powell also met our expectations in eschewing the gradual adjustment guidance delivered on the eve of the 2004 and 2015 normalizations he went further by emphasizing differences that “are likely to have important implications for the appropriate pace of policy adjustments.” His hawkish comments raise the risk of a more aggressive pace of tightening and add upside risk to the interest rate outlook. We remain comfortable that the economy will prove resilient in the face of this adjustment and will rebound from an expected large Omicron drag at the start of the year.  Other DM central banks are also in motion, but at a more gradual pace on both balance sheet and rates. Importantly, this cycle should also prove different as the ECB is expected to be raising rates within a year of the start of Fed normalization.

This podcast was recorded on January 26 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3983276-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Weekender: Two steps forward one step back

Featured in this podcast is Bruce Kasman and Joseph Lupton. The global economy looks to have bounced back strongly last quarter as bottleneck pressures eased and pandemic headwinds faded. But a new round of the same pressures are set to damp growth this quarter. The consumer will bear the brunt. Inflation is a key concern, as rising energy and core prices are joined by surging agriculture prices. Central banks to look through the near-term headwinds and move toward normalization. The Fed next week is widely expected to deliver guidance to March lift-off.

This podcast was recorded on January 21, 2022.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

 

Global Data Pod Europe: A changing outlook for inflation and the ECB

Featured in this podcast are Malcolm Barr, Raphael Brun-Aguerre and Greg Fuzesi.

We discuss recent changes to our forecasts for inflation (higher) and the ECB (earlier tightening).

This podcast was recorded on January 21, 2022.

This communication is provided for information purposes only.  Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3972532-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Americas: Top questions on LatAm 2022 economic outlook

Featured in this podcast are Ben Ramsey, Cassiana Fernandez, Gabriel Lozano, and Diego Pereira. In this podcast we review our economic outlook for Latin America in 2022, a year in which we see many challenges amid prospects for high inflation, tightening monetary policy, slowing growth, and significant political and electoral uncertainty.  In particular, we focus on the main questions we’ve been getting during our conversations with investors as we kick off the new year.

This podcast was recorded on January 20, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3968916-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

 

Global Data Pod Japan: Japanese government’s wage policy is likely to fail

Featured in this podcast is Hiroshi Ugai and Ayako Fujita. Since Japanese firms’ wages have barely increased for 20 years, currently the Japanese government is planning to introduce many measures like a tax incentive, moral suasion, and selective wage increases to accelerate Japanese firms’ wage growth. The government expects that these measures will lay the foundation for future economic growth, and that a large rise in wages would also contribute to a sustainable rise in prices. We discuss the impact of these measures, and find that these measures are unlikely to work under the current high labor income shares and firms’ still cautious price-setting behavior in the face of the huge increases in energy and commodity prices. We think persistent labor shortages or policies to boost labor productivity such as through promoting digital transformation (DX) would have more impact, though it would take time to reap results.

This podcast was recorded on Jan 20, 2022.

This communication is provided for information purposes only. Institutional clients can view the related report at https://jpmorganmarkets.com/research/content/GPS-3966542-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2022 JPMorgan Chase & Co. All rights reserved.

Global Data Pod Weekender: Too much of a good thing

Momentum continues to soften as consumers took a breather through the holidays. Downgrades this week point to 1Q21 being the weakest of the expansion. We see the Omicron wave as a concentrated drag that will reverse in later quarters. But elevated inflation and a faster-than-expected normalization in labor markets is challenging the view of a gradual path of monetary normalization around the world, and this should temper the expansion. 

Featured in this podcast is Bruce Kasman and Joseph Lupton.

This podcast was recorded on January 14, 2022.

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.