New Daily Insights – Power On!

We are pleased to announce the official release of New Daily Insights – BCA’s first interactive service.

macroeconomic researchLaunched today, May 13, 2013 – New Daily Insights is now available as a completely online and interactive experience: research content will be delivered via emails that include hyperlinked titles and no static PDFs. In addition – through the power of responsive design – the service can be viewed across all platforms, including desktops, tablets and smart phones.

Our move to digital delivery coincides with the release of several new features:

Insights: Now with greater breadth and depth, in four categories:

  • Featured Insights: Focused and brief analysis of global financial market trends
  • Morning Meetings: A same-day snapshot into the ideas and debates of our strategists
  • Key Releases: Detailed analysis of the day’s economic data
  • The Week Ahead: Published Fridays, find out what BCA expects will move markets in the week ahead

Ask A Strategist: Interact with BCA strategists online. Ask your questions and access all QA to uncover what is relevant to the BCA community.

Inside BCA: Learn what our strategists are reading, view their comments on controversial themes and views, read interviews with members of the financial community, and discover suggested research from the BCA vault.

Polls: Share your opinion and search previous polls for insights on key topics. Suggest a poll – we’re listening.

We look forward to having our New Daily Insights clients engage with us through comments, questions and polls.

Nanci K. Murdock, CFA
Editor, Inside BCA
New Daily Insights

Europe: Good-Bye Austerity

The below article is reprinted from New Daily Insights – BCA’s first interactive service. Launching Monday, May 13, 2013, the service will include several new and important features: Insights, Inside BCA, Ask A Strategist and Polls.

Originally published May 10, 2013

Last December, our European Investment Strategy service predicted that “2013 would be the year of the big U-turn on obsessive austerity”.

Europe - Austerity

Recent developments now offer evidence that this prediction is coming true.

  • Recent statements from key policymakers in the euro area indicate that the public debate on austerity is shifting.
  • Most euro area economies have made big dents in their structural deficits. Indeed, many have moved into a structural primary surplus, giving Brussels plenty of excuses for leniency.
  • Periphery current accounts have also moved into surplus, thereby reducing the risk of financing problems.

S everal factors are going to make it easier for Europe’s policymakers to backtrack on obsessive austerity. For example, the link between austerity and poor economic performance is very clear. Also, financial markets support some austerity slippage: the election of anti-austerity forces in Italy, budget deficit slippage in Spain, and the Portuguese Constitutional court’s decision to strike down some austerity measures has had no adverse effect on the ongoing bond market rally.

Also, as highlighted in our previous research, ‘Abenomics’ offers a template for Europe. Japanese Prime Minister Abe pledged a fiscal stimulus equal to 2.3% of GDP to be launched in 2013, which did nothing to dent the rally in JGBs. Abe has illustrated the importance of accumulating political capital through monetary and fiscal stimulus measures, in order to pursue structural reform later in his term. The idea is to establish credibility by generating nominal growth, and then to push through unpopular and painful reforms.

Bottom Line: We expect that European policymakers will de-emphasise austerity so that they can re-emphasise structural reform.

Interested in the market implications of decreased austerity policies in Europe? We’ve covered them in New Daily Insights.