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The fiscal Ring Cycle

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  • The Eurozone's German crisis (aka the Greek crisis) saw no resolution after the finance ministers' meeting, but this was never very likely. Progress towards the inevitable compromise will take a long time - not a pithy Greek play, more a fiscal Ring Cycle (only with more melodrama and wailing than Wagner).
  • German consumer price inflation (final data) for January should confirm a negative rate. This is not deflation, as it is not a general decline in the price level - it is a relative price shift, which should be viewed as a potential economic stimulus.
  • The Bank of England's inflation report is likely to regard the medium term consequences of the current temporary disinflation forces as being stimulatory. Look to the longer term inflation projections, which may increase as a consequence.
  • US retail sales are forecast weaker at -0.7%, though this owes much to the disinflationary forces of global oil prices. In real terms we see the US consumer continuing in their lifelong pursuit of relentless hedonism, creating a positive consumer, US economic and global economic environment.