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Economics ResearchEconomics Products: Absolute Strategy Weekly, Economics Quarterly, Newsflow Monitor, Multi-Asset Strategy Weekly.
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Equity Strategy: Scope for Spanish Equities to outperform Italy
Multi-Asset: A case for selling Nikkei calls
Equity Strategy: FAANGs: it’s time to play the 2nd Eleven instead!
Multi-Asset: Bond angles to watch as ECB tapers QE
Political Analysis: Progress, but still high risk that Brexit will talks stall
• The ASR/WSJ Global Composite Newsflow Indicator (CNI) of macro activity rose in September to stand at 60.0, compared with a 59.2 reading in August. Global CNI readings of around 50 have tended to be associated with stock returns keeping pace with bond returns on a year-on-year basis (see Chart 1). This month’s CNI outturn, which remains elevated and rising on a month-on-month basis, remains consistent with the positive stock-to-bonds returns ratio.
• Our proprietary NewsFlow indicators are created by searching the Dow Jones Factiva database for ‘positive’ and ‘negative’ macroeconomic news stories, counting them, and then calculating the difference (the ‘net’ news flow). The searches are done in English, so the global series will be dominated by stories from and about the Anglo sphere. But they still capture global trends well.
• The Global CNI is built up from six sub-indices – see Charts 2-7 on pages 2 & 3. Arguably the most striking move at the sectoral level is the turn in the Corporate Earnings NewsFlow series, which two consecutive moves down appear to confirm (Chart 3). The move has been quite broad-based, with four out of the six regions experiencing a decline. The eurozone measure stood out as particularly worrying.
• At the regional level, the UK’s NewsFlow continues to belie Brexit uncertainty. The composite measure is now at its highest level since July 2014, with positive economic, labour market and inflation ‘chatter’ pushing it higher (Charts 11, 32, 33 & 35).
• The fiscal sub-component of our Macro Policy NewsFlow measure has jumped back into positive territory on the back of the new US corporate tax plans (Chart 50). We wonder if a parallel tightening of the monetary policy component might offset it.
Multi-Asset: Getting exposure to ECB guidance unwind
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