The Weekly Briefing from Capital Economics

As the dust began settling on a hastily arranged takeover of Credit Suisse by UBS, our economists briefed clients on what’s next in this recent surge in turmoil in the banking sector. In these excerpts from the briefing, you’ll hear them discuss key issues, including: Whether the Credit Suisse deal draws a line under this crisis; What to expect from the Federal Reserve and Bank of England’s March meetings;Why, even if this is the end of the turmoil, even deeper recessions loom.Participants:Jennifer McKeown, Chief Global EconomistVicky Redwood, Senior Economic AdviserPaul Ashworth, Chief US EconomistPaul Dales, Chief UK EconomistJack Allen-Reynolds, Deputy Chief Euro-zone EconomistJonas Goltermann, Deputy Chief Markets Economist

A rushed deal for UBS to take over embattled rival Credit Suisse ahead of the start of the Monday open is the latest effort by authorities to restore market confidence and staunch a crisis in the banking sector that is now threatening to run into its third week. Has enough been done? As details of the UBS-Credit Suisse deal trickled out, Group Chief Economist Neil Shearing discusses some of the uncertainties around the weekend’s events but also points to the bigger picture macroeconomic risks associated with this crisis.Plus, ahead of the release of a key UN report on the climate crisis, David Oxley, the head of our Climate Economics coverage, explains why we think the long-held relationship between emissions and economic growth will break down and why India will become the world’s biggest polluter in the coming decades. Click here to access the analysis referenced in this episode.

Could turmoil in the US banking sector mark the end of Fed rate hikes? What are the contagion risks from the collapse of SVB and Signature Bank? What will the regulatory response look like?This is a special Capital Economics Weekly Briefing episode all about the SVB crisis. It contains some key edited excerpts from an online briefing held for clients with Group Chief Economist Neil Shearing, Chief US Economist Paul Ashworth, Chief Global Economist Jenny McKeown and Chief Markets Economist John Higgins. The briefing was held at 0900 New York/1300 London on Monday, 13th March. The full recording, and all our key coverage about this crisis, can be found on our dedicated SVB page.

Was Silicon Valley Bank's failure an isolated case of bad balance sheet management, or does it point to the start of another financial crisis? As policymakers scrambled to shore up market confidence ahead of the open, Group Chief Economist Neil Shearing discussed what SVB means for the broader economic and policy outlook. Plus:· Julian Evans-Pritchard, our Head of China Economics, on what another five-year term with Xi Jinping in charge means for China and the world.· And, Senior Global Economist Simon MacAdam explains why the big hit to economic activity from monetary tightening so far is still to come.Click here to read the analysis referenced in this episode.

It’s US payrolls week and all eyes will be on whether January’s blowout jobs growth number was just a one-off or confirmation that – despite the Fed’s actions – the labour market remains tight.Labour market conditions matter hugely for how much further central banks across advanced economies have to go to whip inflation. The challenge is in understanding how they're evolving as pandemic-era distortions take their time to fade. Group Chief Economist Neil Shearing discusses with Vicky Redwood, our Senior Economic Adviser, and Chief US Economist Paul Ashworth what’s going in labour markets and what this means for policy, with a special focus on February non-farm payrolls and how the Fed will respond. Click here to read the analysis referenced in this episode.

By mid-century, India will have risen to become the world’s third biggest economy. But China will remain at number two, despite forecasts that it is set to overtake the US. These are findings from our latest Long Run Economic Outlook, a report which looks out decades to show a global economy that has been reshaped by intense US-China competition, but also by major demographic shifts and the widespread adoption of productivity-boosting technologies. Chief Global Economist Jennifer McKeown and Mark Williams, our Chief Asia Economist, discuss just some of the report’s key takeaways, including the forces that will propel India up the global GDP rankings but will also hold China back from the number one spot.Plus, Group Chief Economist Neil Shearing is on the phone from a departure lounge in Singapore after a week briefing clients – and it seems they share common near and long-term concerns about what’s happening in the global economy. Click here to access the analysis referenced in this episode.

Russia invaded Ukraine a year ago this week, prompting a torrent of prediction about how much this singular moment would change Europe’s economy forever. 12 months later, David Wilder talks to Andrew Kenningham, our Chief Euro-zone Economist, and Liam Peach, our Emerging Europe research head, all about how the war in Ukraine has – and hasn’t – altered Europe’s economic picture. Plus:A looming UK recession will trigger a wave of corporate insolvencies. Deputy Chief UK Economist Ruth Gregory talks to UK Economist Olivia Cross about how big this wave will be and how it will affect the UK’s long-term economic outlook.As Nigerians prepare to head to the polls for a crunch presidential election, Jason Tuvey and Virág Fórizs discuss what this could mean for the future of Africa’s biggest economy.Click here to read the analysis referenced in this analysis.

Not only have emerging market economies, for the most part, come through this aggressive global tightening cycle without being plunged into a 1980s or 90s-style debt crisis. In many cases, their central banks were raising rates even as their advanced economy peers were still debating whether inflationary forces were “transitory”. In the latest episode of The Capital Economics Weekly Briefing:·        Group Chief Economist Neil Shearing discusses what’s changed in EMs since crises past; ·        Why their central banks didn’t hesitate to raise rates; ·        How they’re likely to fare as advanced economies stall. Plus: ·        With the Adani Group’s woes continuing to dominate the headlines, our EM team assess Indian – and broader emerging world – bank vulnerabilities. Click here for the analysis referenced in this episode.

A stunning January jobs report has shifted the market narrative around the US economy, but has the fundamental story really changed that much? And does the economic picture justify the market’s bullish start to 2023 or have investors been partying in the face of a looming recession? Paul Ashworth, our Chief US Economist, joins Chief Markets Economist John Higgins for a discussion about what’s really happening in the US economy, what the Fed is likely to do, and what this all means for US equities, bonds and the dollar. Click here to read the analysis in this episode.

In this episode:Forecasts are being revised up, the global tightening cycle is slowing down and markets are cheering. But are things really looking better? Group Neil Shearing reviews the recent data – including January’s stunning US payrolls numbers – as he explains why the isn’t an entirely feelgood story. Plus;Long-standing buyers of US Treasuries may not have the appetite they once did, says Tom Mathews from our Markets team in an in-depth new report.. He discusses what this means for the outlook for yields.Click here to read the research referenced in this episode.