The Fed’s use of the word “weather”, vulnerable high street profits, gold’s revival, and the economic effects of the Ukraine crisis.
We bring you some of our favourite analysts’ picks of the most important graphs this week.
David Lebovitz, global market strategist at JP Morgan Asset Management:
There has been a lot of discussion of the impact that uncharacteristically inclement weather may have had on US economic data at the start of 2014. While the data for March will reveal the true extent of this impact, the release of the Federal Reserve's March Beige Book suggests that harsh weather may have in fact affected the US economy so far this year. As shown in the chart, the term "weather" was mentioned 119 times in the March 2014 Beige Book, well above the average of 28 mentions in the March publication since 1997, thereby suggesting that the Fed may be justified in pointing to weather to explain weakness in the economic data.
Jeremy Cook, chief economist at World First:
The British Retail Consortium prices index has fallen nine months in a row, and February’s number was the largest fall on record – a decline of 1.4 per cent. January is normally the month for discounting, as retailers want to tempt people back through the doors, but the fact that February’s is so low as well means that the price cuts have continued. This leads us to believe that high street profits remain in danger, despite all the chatter of a recovery, and that consumers will remained squeezed at the margin for a time to come.
Julian Jessop, chief global economist at Capital Economics:
The crisis in Ukraine has underlined gold’s enduring role as a safe-haven asset. But the renewed decline in yields on government bonds has also helped by reducing the cost of holding an asset, like gold, that pays no income. US bond yields are still likely to trend higher over the coming years, but monetary policy will remain relatively loose, and the price of gold has already fallen a long way. In the meantime, the fact that gold has benefited in an environment of increased risk should lay to rest the idea that it has lost its safe-haven status.
Christian Schulz, senior economist at Berenberg:
Russia’s effective invasion of Crimea has caused a stand-off with the West. Its oil and gas supply gives Russia some leverage, but the drop in the rouble highlights an asymmetry: Russia depends more on exports to the EU than vice versa. The crisis has not even dented the West’s recovery, nor set off new emerging market turbulence. Instead, Russia is facing the cost of defending its currency, as well as the looming impact of sanctions.