The Weekly Briefing from Capital Economics

For the past three years, our Markets team has been more optimistic than most about the AI-driven rally in global equities. That view has been borne out by events. Now they believe the rally has entered its final phase and that a sharp downturn will follow.  On this week's The Weekly Briefing, Chief Markets Economist Jonas Goltermann explains why the end is nigh, what to expect before the plunge, and whether the Fed will play a role in the rally's demise. 
Also on the show, Climate and Commodities Economist Hamad Hussain discusses why our long-standing forecast that gold prices would retreat from their record highs is playing out, and why prices have further to fall from here.
Related content:
Drop-In: AI's global shockwaves – Macro and market implications
Asset Allocation Outlook: The AI equity boom reaching its final innings
https://www.capitaleconomics.com/publications/asset-allocation-outlook/ai-equity-boom-reaching-its-final-innings
Commodities Outlook: Beyond Hormuz – the path back to an oil glut
https://www.capitaleconomics.com/publications/commodities-outlook/beyond-hormuz-path-back-oil-glut

Our flagship Global Economic Outlook is just around the corner, and in this latest episode of The Weekly Briefing, Group Chief Economist Neil Shearing previews our view of a world in which some economies are benefiting from the AI investment boom while others are falling behind. He also discusses what to expect from next week’s US employment report and why markets are underestimating just how hawkish the Fed may need to remain to bring inflation back to target.
Also on the show, with Andy Burnham’s 'coronation' as the UK’s next prime minister looking increasingly likely, what do we know about the new government’s plans? Paul Dales and Ruth Gregory from our UK team discuss the fiscal constraints that will limit a Burnham government’s spending ambitions, while explaining why falling inflation could allow the Bank of England to deliver much more monetary easing than markets currently expect.
Related content
UK Economic Outlook: Fall in inflation to 2.0% in 2027 to trigger rate cuts
https://www.capitaleconomics.com/publications/uk-economic-outlook/fall-inflation-20-2027-trigger-rate-cuts
Capital Economics Events
https://www.capitaleconomics.com/events

A peace deal that's already showing signs of strain. Central bankers still wrestling with inflation. A new Fed chair seeking reform. And a UK local election with implications for the bond market.

It’s been a busy week for macro and markets, and Group Chief Economist Neil Shearing joins David Wilder to make sense of it all. Neil explains what the increasingly fragile US-Iran peace deal means for global oil supplies and the outlook for inflation and interest rates.  
In his discussion, Neil reviews Kevin Warsh's first meeting as Fed chair, considers the outlook for US interest rates, examines mounting trade tensions between Europe and China, and explains why the UK's next prime minister may find fiscal promises difficult to keep.

Relatively strong US growth, sticky inflation and a resilient labour market have strengthened the case for further Fed tightening. In this week's episode of The Weekly Briefing, Chief North America Economist Stephen Brown tells David Wilder why rates may rise again before year-end and what to expect from Kevin Warsh's first meeting as Fed Chair.
Before that, it's Groundhog Friday, as Donald Trump again talks up an imminent deal to reopen the Strait of Hormuz. But what if this time it really is for real and a US-Iran deal does get done? Group Chief Economist Neil Shearing discusses how the outlook could shift if energy starts flowing again, but also explains the economic risks if any deal later falls apart as crude reserves run down.
Related content
Fed on hold as Warsh faces a fractious FOMC
BoE may not follow the central bank crowd in raising rates
BoJ on track to hike despite Ueda’s absence

Are we moving towards Fed rate hikes? Even before the release of a strong May US employment report, Group Chief Economist Neil Shearing joined The Weekly Briefing to explain why shifting dynamics on the FOMC mean the Federal Reserve could emerge from the summer weighing the need for tighter policy to contain inflation.
Plus, after another extraordinary surge in AI stocks, Chief Economic Adviser for Financial Markets John Higgins discusses how much further the rally could run, whether current earnings growth is sustainable and what could ultimately burst the stock market bubble.
Related content
Bar to Fed hikes appears relatively low
Capital Economics events