Global Data Pod

Featured in this podcast is Hiroshi Ugai and Tohru Sasaki. With the current continuation of depreciation, the Japanese yen has fallen to its historical low on a real basis. Amid the sharp rise in energy prices, markets are concerned that yen depreciation may harm Japan’s economy. However, we argue that, although the trade structure has changed, yen depreciation still stimulates Japan’s economy, and those concerns may be largely because it is likely to hit the weakest part of the economy during the pandemic. Next, we discuss the structural background behind the fact that the yen has not returned to appreciation, and various scenarios of the yen’s future. If the Japanese economy realizes an improvement in productivity growth and economic growth, thereby increasing income growth, the yen would stop depreciating at least on a real basis. However, if that does not happen, the currently poor state of the economy could continue or worsen, and the yen could continue to depreciate, both on a nominal and real basis.

This podcast was recorded on Nov 11, 2021.

This communication is provided for information purposes only. Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-3913011-0, and https://www.jpmm.com/research/content/GPS-3915343-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

The October PMIs showed a strong post-delta wave recovery in services, but supply disruptions continued to weigh down momentum in manufacturing. That said, data out of EM Asia point to a nascent easing of bottlenecks there. The US jobs report revealed strong payroll growth and a further drop in unemployment, but supply constraints also were apparent in the participation rate and job flows. These supply-side issues are pressuring inflation higher and challenging central banks’ communications.

Speakers:

Bruce Kasman

Michael Hanson

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.

Nora Szentivanyi and Jahangir Aziz discuss the wide variation in post-pandemic recoveries in emerging markets, the persistent damage to medium-term growth and implications for policy and politics. EM has come out worse than DM in the pandemic. Outside of China, EM GDP is currently about 4% below its pre-pandemic path; the hit has been uneven with gaps of 7% or greater in a number of EM countries, mostly in South Asia and Latin America. Despite the pickup in vaccinations we generally see the weak links continuing to deliver sub-par outcomes. EM will enter an electoral cycle from 2022 and the political economy of permanent scarring will likely affect politics and policies materially, especially in Latin America. The consequences of the pandemic are likely to be long-lasting, lowering potential growth. EM potential was trending lower even before the pandemic and we estimate a further 0.5%-pts hit from the pandemic outside of China.

This podcast was recorded on November 4, 2021.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3900323-0, https://www.jpmm.com/research/content/GPS-3907254-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Bruce Kasman is joined by Haibin Zhu, Grace Ng, and Joe Lupton to discuss our forecast that global growth is rotating toward Asia as we move toward year-end. There are three forces driving this view: A China policy turn, a relaxation of regional supply chain constraints, and a fading of Delta wave drags amid rising vaccination rates. China has been the biggest disappointment recently and uncertainty about policy preferences alongside October survey disappointments keeps risks skewed to the downside. The news is more upbeat elsewhere in the region where mobility has moved higher and the October PMIs moved higher led by the ASEAN countries.

This podcast was recorded on November 3, 2021.

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.

How transitory the drags are holding back 3Q global GDP and lifting inflation are the central question for the outlook. For now, we see growth picking up this quarter, led by Asia and the US. Next week’s PMIs and US payrolls will be keenly watched. The ECB and BoC bookend the views on the risks around this debate, with the ECB holding firmly to it transitory view and the BoC tempering their commitment. Next week is expected to see the BoE hike under pressure and the Fed to begin tapering, with particular attention given to guidance on inflation and its rate liftoff.

Speakers

Joseph Lupton

Michael Hanson

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.

Bruce Kasman is joined by Jose Cerveira, Greg Fuzesi, Joe Lupton, and David Mackie to discuss the recent rise of COVID cases across Europe. The source of this new wave appears concentrated in young unvaccinated populations but a fading of vaccine effectiveness, the onset of colder weather, and a relaxation of restrictions all contribute to the latest outbreak. The risk of a significant shift toward policy restrictions is modest as the latest wave is generating significantly lower hospitalizations. But our European mobility metrics have been sliding in recent weeks, reinforcing downside growth risks already evident in the recent softening in surveys. Europe’s downshift stands in sharp contrast to the US and Asia (ex. China) where mobility and high-frequency indicators look to be pointing positive. This points to a potential rotation in global growth this quarter that might be reinforced with the recent moves by the US to increase boosters and extend vaccination to children.

This podcast was recorded on October 27, 2021.

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.

A key question for the global outlook is whether the disappointment in 3Q global growth, now tracking 3.4%ar following a weak China report and downside revisions for the US next week, will reverse in 4Q. The October flash DM PMIs suggest improving momentum into the current quarter, but also intensifying supply constraints. EM central banks continue to tighten as inflation accelerates, and we now see the BoE hiking this year.

Speakers:

Bruce Kasman

Michael Hanson

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.

Featured in this podcast is Hiroshi Ugai and Ryota Sakagami. With the government’s change in decarbonization policy since last year, private firms have already started taking aggressive measures and we expect massive investment in changing the energy mix, firms’ proactive green capex, and housing investment. This decarbonization investment likely will accelerate until 2030, which could raise Japan’s economic growth rate. This would be a tailwind for construction, housing, and banks, as well as machinery and materials. That said, decarbonization could become a large external diseconomy if the Japanese economy fails to adjust smoothly, and the government should accelerate the working out details of the Green Growth Strategy and expand its financial supports.

This podcast was recorded on Oct 21, 2021.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3888227-0 and www.jpmm.com/research/content/GPS-3887300-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Featured in this podcast are Gabriel Lozano and Ben Ramsey.

This month, Mexican President Andres Manual Lopez Obrador (AMLO) presented a constitutional reform proposal that would roll back a number of growth-enhancing structural measures designed to liberalize his country’s energy sector.  While the proposal is wide-ranging, most impacted would be Mexico’s electricity sector, which would largely be turned back to the state-owned utility, CFE. We see numerous adverse economic impacts from the proposal, which we discuss, while also assessing the most likely outcome of the legislation before Mexico’s Congress. At this point, we would not discount the risks that a substantial portion of the president’s proposal could become law. Ben Ramsey, J.P. Morgan’s head of Latin America Research in New York, interviews Mexico Chief Economist Gabriel Lozano from Mexico City.

This podcast was recorded on October 21, 2021.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-3888935-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2021 JPMorgan Chase & Co. All rights reserved.

Bruce Kasman is joined by Michael Feroli, Joe Lupton and Allan Monks to discuss the reaction functions of the US Fed and UK BoE. We moved forward our forecast for the first BoE rate hike to November this week as the BoE appears more concerned about the risk of persistent inflation against a backdrop of tightening labor markets and rising inflation breakevens. Faced with a similar set of concerns the Fed is set to remain patient in the coming months. This contrast reflects both a different assessment of risk and a Fed reaction function more focused on labor market healing. The Fed’s patience will likely prove limited if inflation doesn’t moderate significantly during 1H22. And markets seem complacent about the medium-term consequences of Fed that is likely to start its normalization well behind the curve.

 

This podcast was recorded on October 20, 2021.

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.