In his latest weekly letter, economist Jim O’Neill notes points to some of the positive developments around the world. Here are some points:
- China: “After months of debate about a ‘soft’ or ‘hard landing’, the data published since last Friday is very supportive of the optimists’ view.”
- U.S.: “After another week of rather spectacular housing data in the US, with starts showing a bumper 15% rise, some are tempted to raise their 2013 GDP forecasts despite the fiscal cliff issues.”
- Europe: “The Eurozone passed through another week with no notable new disaster, and most interestingly a major drop in Spanish 10-year bond yields which seems to reflect a view that at some point, it is a done deal, Spanish bonds will get official ECB support.”
All in, this is has been bullish for the aggregate global economy, which is gaining momentum for the first time this year. From O’Neill’s note:
A Pick Up In Global Momentum.
The GS October Global Leading Indicator (GLI) itched out a tiny rise in momentum of 0.09%, the first and welcome positive change since December 2011. Against a background of very easy OECD financial conditions, which in oil-adjusted terms, have eased even more recently, this change suggests more reasons for optimism in my view. There are probably some banana skins out there, but as we discussed in this week’s GSAM CIO call, we are not sure that they are the frequently discussed ones.
However, markets are selling off aggressively today.