Global Data Pod

Nigeria faces a pivotal election this coming Saturday where voters will choose a new president. Nigeria is the largest economy in Africa with vast oil wealth, but years of mismanagement have worsened imbalances and it has failed to fully benefit from the commodity windfall. From multiple exchange rate regimes to Central Bank quasi-fiscal spending to ballooning fiscal expenditure to high inflation, the next president will have a full in-tray. But based on the polling there is a chance that this election represents a break from the past.

In this edition of the Global Data Pod, Katie Marney is joined by Gbolahan Taiwo to discuss Nigeria’s election, what the polls say, the tall task ahead, and policy priorities for the next president.

Speakers:

Katherine Marney, Emerging Markets Economic and Policy Research

Gbolahan Taiwo, Emerging Markets Economic and Policy Research

This podcast was recorded on February 22, 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4337030-0, www.jpmm.com/research/content/GPS-4309655-0, www.jpmm.com/research/content/GPS-4263687-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi is joined by Bruce Kasman to discuss why the widely held that monetary policy is already restrictive may be wrong. Central banks have been downshifting the pace of rate hikes based on the view neutral real rates remains close to zero in developed markets. But dramatic changes to the cyclical backdrop following the pandemic shock, along with the erosion of policy credibility and higher risk premia in several EMs, point towards higher neutral policy rates. Absent a recession taking hold this year, we expect views about the appropriate level of policy rates to shift higher. But if the dramatic rate hikes (400bp in DM and nearly 500bp in EM) generate a recession then the neutral rate rise will be obscured for some time.

The path to the next recession is hard to tie down, but risks are skewed in the direction of this dynamic taking longer and requiring higher rates than markets expect. Incoming data suggest that the path may not incorporate any meaningful pause but instead reflect a gradual but sustained adjustment to lean against still-elevated inflation risks. In this scenario, central banks may not be intending to create a downturn—but that risk will increase as they continue to tighten monetary policy rates above what is currently priced in markets.

Speakers:

Bruce Kasman, Managing Director, Chief Economist

Nora Szentivanyi, Economic Research

This podcast was recorded on February 21, 2023.

This communication is provided for information purposes only. Institutional clients can view the related report at www.jpmm.com/research/content/GPS-4334724-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The latest data show a US (and global) economy that is not only proving more resilient than some had feared but also more inflationary. The odds have risen for an expansion that may be in need of central banks stepping on the breaks more than we had expected and even more than markets.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi is joined by Ayako Fujita and Benjamin Shatil to discuss the latest developments in the Bank of Japan’s path towards monetary policy normalization. We do not expect the new BoJ nominations to materially affect the timing of YCC removal which we still see taking place around mid-2023. However, rising demand-side pressures on prices and growing market pressures suggest risks are for an earlier move.

Our forecast also anticipates an eventual exit from negative interest rates (NIRP) by 2024. The BoJ’s shift will have important implications for capital flows and the yen as Japanese investors continue to rotate investments from foreign assets back to domestic debt.

This podcast was recorded on February 13, 2023.

This communication is provided for information purposes only.  Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4332950-0.pdf  https://www.jpmm.com/research/content/GPS-4310608-0  https://www.jpmm.com/research/content/GPS-4316195-0   for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

We continue to process January activity readings which point to the US expansions remaining intact while the China reopening bounce gathers. But this week’s news was the surprising firmness in January core CPI readings. The message of positive growth and inflation news should be reinforced by next week’s US reports where we look for a rise in core CPI of 0.5% m/m and a 2.2% bounce in retail sales.  

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. © 2023 JPMorgan Chase & Co. All rights reserved.

Nora Szentivanyi is joined by Katherine Marney to discuss an improved macro landscape for EM and what it means for growth, capital flows and monetary policy. The fading of key near-term headwinds has led to a strong start for EM capital flows, and we believe these sources of support, including China’s re-opening, disinflation, and reduced near-term recession risks can last a while. Prospects of a late 2Q Fed pause, weaker USD and better global growth should open up space for EM central banks to ease monetary policy this year. Sustained strength in the US labor market poses a risk to this view. But provided inflation eases as we expect, and barring a re-pricing of the US dollar, we think the macro backdrop can remain supportive for EM. 

 

Speakers

Nora Szentivanyi, Economic Research

Katherine Marney, Emerging Markets Economic and Policy Research

 

This podcast was recorded on 7 February 2023.

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4325660-0.pdf, https://www.jpmm.com/research/content/GPS-4296890-0, https://www.jpmm.com/research/content/GPS-4316594-0, https://www.jpmm.com/research/content/GPS-4321526-0 for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

On this week’s Global Data Pod Edge, our focus is on Saudi Arabia, Oman and Bahrain. Our economists covering the region had one full day of meetings in each of them. They met with authorities and local companies. The podcast discusses recent developments and 2023 outlook for this set of GCC economies.

The mood in the area remains positive after a strong year which saw high growth thanks to the rebound in hydrocarbon production as well as a strong and resilient non-hydrocarbon sector performance. On top of that, the region experienced a limited amount of inflationary pressure, well below anything seen in other Edge countries or around the entire globe. Hydrocarbon prices are expected to continue to be supportive but surely some differentiation remains amongst countries and expectations for their 2023 performance. We invited two of our Edge Economists, Anatoliy Shal and Francesco Arcangeli, who recently returned from a business trip from the area to discuss their impressions.

Speakers

Nicolaie Alexandru-Chidesciuc, EM, Economic and Policy Research

Francesco Arcangeli, EM, Economic and Policy Research

Anatoliy A Shal, EM, Economic and Policy Research

 

This podcast was recorded on February 6, 2023.

This communication is provided for information purposes only.  Institutional clients can view the related report at https://www.jpmm.com/research/content/GPS-4322630-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

After a few weeks of data fanning worries of a near-term recession, this week’s activity data provided relief. The global January PMIs improved broadly across countries and sectors. In the US, a gangbuster payroll report belied a number of more anecdotal reports suggesting labor market retrenchment. Also, the US consumer looks to have opened their wallets in January for motor vehicles. Not all is rosy, as the industry data out of Asia continue to be ugly and the risks outside of China are skewed to the downside. News on capex spending is also softening. Moreover, while US and European resilience is welcomed, too much strength reinforces the risk of more aggressive rate hikes that risk recession later.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

The EM Edge economies are a diverse group across the globe—from investment-grade countries, including some large oil-exporting economies, to sovereigns long since in financial distress. In between are many frontier markets with varying degrees of vulnerabilities. Understanding external financing needs and sources is a critical piece of the analytical puzzle for such economies, where funding needs, external and domestic, act as binding constraints that shape economic policies.

This year brings signs that several sources of stress that have buffeted emerging markets could be ebbing: global food and energy inflation are slowing. Reopening in China may help offset downside risks to growth elsewhere. Signs that inflation has peaked in the US have raised hopes for a soft landing that would allow the Fed to relax its hawkish stance. Important risks remain, however, including a scenario in which disinflation stalls and global central banks continue tightening. With this in mind, we discuss external funding needs across Edge economies this year and invite two of our Edge Economists, Gbolahan Taiwo and Jin Tik Ngai, to dive more into Egypt and Pakistan.

Speakers

Nicolaie Alexandru-Chidesciuc, EM, Economic and Policy Research

Ben Ramsey, Emerging Markets Economic and Policy Research

Katherine Marney, Emerging Markets Economic and Policy Research

Gbolahan Taiwo, EM, Economic and Policy Research

Jin Tik Ngai, Emerging Markets Asia, Economic and Policy Research

 

This podcast was recorded on 30 January 2023.

This communication is provided for information purposes only. Institutional clients can view the related report https://www.jpmm.com/research/content/GPS-4309915-0 and https://www.jpmm.com/research/content/GPS-4306281-0  for more information; please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.

Next week will deliver three eventful central bank meetings as we expect the Fed, ECB, and BoE to continue to hike but also provide guidance on the path ahead while also maintaining optionality. Nevertheless, with rates restrictive, central banks have become more data sensitive. In this regard, next week will also deliver a set of key data on growth, inflation, and labor markets.

Speakers:

Bruce Kasman

Joseph Lupton

This communication is provided for information purposes only. Institutional clients please visit www.jpmm.com/research/disclosures for important disclosures. © 2023 JPMorgan Chase & Co. All rights reserved.