In recent years, several migratory trends have emerged. In Europe, the most notable development is the emergence of flows from southern and eastern countries to northern and western states. It is noticeable that the southern nations tended to be worse effected by the euro area crisis and that eastern nations tend, on average to have lower per capita incomes. Refresh the chart in your browser | Edit chart in Datastream But, how far can economics go towards explaining these trends? In an attempt to identify the factors driving intra-EU migration Fathom has developed its own model. According to the model, a country’s

Twenty-First Century Fox can squeeze another $5 billion out of its suitors – or so the market seems to be suggesting. Back out the bits of Rupert Murdoch’s media empire that dueling bidders Comcast and Walt Disney don’t want, adjust for the time value of money, and investors are expecting Fox’s crown jewels to fetch as much as $76 billion, or $41 a share. Disney is ahead by a nose after offering $71.3 billion, or $38 a share, this week for Fox’s entertainment and international bits. Comcast may counter, but either winner leaves behind some of Fox’s assets, meant to

America’s latest immigration push isn’t just cruel, it’s bad economics. Separating children from parents illegally entering the country is immoral – and expensive. Detention costs could hit up to $100 million for just one month, eating into a $3.2 billion deportation budget. And that’s before calculating the longer-term impact a reduction in immigration will have on the economy. President Donald Trump recently toughened his already hardline immigration approach because of a jump in illegal entrants. Most of them are fleeing violence in Central America. In March 2018, there was a 203 percent increase in illegal border crossing compared to the

Last Thursday, the MPC again voted 7–2 to keep Bank Rate on hold at 0.50%. Following recent remarks by Governor Carney, a ‘no change’ decision was widely expected by investors. As recently as one month ago, investors viewed the prospect of a rate hike by the end of this year as virtually certain. By close of business the day before the MPC vote, the chances had faded to just over 70%. Immediately following publication of last Thursday’s Inflation Report, market-implied odds fell to just over 60%. Refresh the chart in your browser | Edit chart in Datastream According to Thursday’s Inflation Report,

Global equity markets have regained their poise even though trade negotiations between the US and China recently hit a deadlock. Our China Exposure Index weights together US listed-firms that derive a large proportion of their revenue from China and would therefore be most sensitive to retaliatory sanctions in a trade war. On 29 March we highlighted that investors in these firms did not seem to be overly concerned about a deterioration in US–Sino relations — since then, the CEI dropped six points before steadying last week. Refresh the chart in your browser | Edit chart in Datastream The strong dollar and the

Fathom’s probability of default indicators calculate the market-implied probabilities of sovereign defaults based upon credit default swaps. The latest data suggest that the market views the likelihood of any European sovereign defaulting as remote, with the indicators for all countries bar Greece remaining below 10%. Refresh the chart in your browser | Edit chart in Datastream For Greece, the likelihood of default remains high — the market views the probability of a default by the euro area’s most indebted nation within the next five years as 28%. Such concerns are likely to be highlighted this summer as Greece seeks to negotiate a

The Fathom Macroeconomic Policy Indicator (FMPI) weights together measures of both the monetary and fiscal stance to summarise, in a single statistic, the degree of macroeconomic stimulus in any given country. Refresh the chart in your browser | Edit chart in Datastream As our chart shows, although the overall stance of policy has been at least moderately loose across the major economies since the crisis hit in 2008, it became substantially more stimulative last year. Much of this reflected an easing of monetary policy as headline inflation rose against largely unchanged nominal rates of interest. The degree of stimulus across the euro

The Italian equivalent of the English idiom, “to kill two birds with one stone”, involves catching multiple pigeons with one bean, apparently. Whatever the precise translation, Mario Draghi has certainly achieved more than one positive outcome while presiding over the ECB’s QE programme. While the primary rationale for large-scale asset purchases was to return inflation closer to target, the ECB’s QE programme also conveniently compressed sovereign debt spreads between core and periphery states, creating breathing space for countries with excessive debt levels. However, the QE programme is now nearing its conclusion and the end to net purchases will bring upward

On the surface it appears that Italy is finally beginning to enjoy a cyclical upswing similar to the rest of the euro area, with growth having accelerated in 2017. Fathom, however, predicts that this upturn will be short-lived. In the long term, structural problems (including excessive levels of debt, the prevalence of non-performing loans, a declining population and anaemic productivity growth) will continue to hamper the Italian economy. In the near term, uncertainty surrounding the upcoming election, and the possible introduction of a parallel currency, may weigh on confidence heading into 2018. Refresh the chart in your browser | Edit chart in

The less confident consumers feel, the more they pin their hopes on insurance and warranties. From such unhappy logic, TPG has plucked a financially fairly uplifting deal. The buyout firm has sold its car insurance business Warranty to U.S. insurer Assurant for $2.5 billion, roughly doubling its money over three and a half years. By paying mostly in shares, the buyer also gets some insurance of sorts. Assurant wants to tilt its portfolio further towards “lifestyle” offerings. In plain speak, that means it wants to get more of its earnings from insuring personal effects like phones and cars, rather than

Last week, the UK Monetary Policy Committee struck a more hawkish tone, arguing that “some withdrawal of monetary stimulus [was] likely to be appropriate over the coming months”. As a statement of intent, we would not read much into this. Having struggled to rationalise the unexpected weakness in business investment and net trade in the second quarter, the Committee appears to be relying on consumer expenditure being firmer than forecast in order to justify the maintenance of its 0.3% GDP growth estimate for Q3. But data released last week confirmed our suspicion that the consumer squeeze intensified going into the

Sustained period of GDP growth above 3% — check. Continually falling unemployment — check. Considerable progress in fixing the banking sector — check. Ten-year government yield falling from 4% to less than 1.5% — check. For over two years Spain has continually been one of the fastest growing economies in the euro area. In the second quarter of 2017 Spain recorded quarterly growth of 0.9%, above the already impressive 0.6% average for the whole of the euro area. This notwithstanding, Spain’s unemployment rate still stands at 17%, the highest rate among major euro area countries apart from Greece. Additionally, the