Nicholas Glinsman | May 8th, 2022

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May 8th, 2022

A free look at some brief thoughts about the week ahead, along with highlights from the past week’s subscription issues of Ahead of the Herd, and our Macro Dailies for Asia-Pac and Europe.

An update on the Macro subscription packages:

Daily Ahead of the Herd – either $50 per month or $500 pa

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Should you wish to have a tour of the website, such can be seen during a short interview with our editor and Global Macro expert, Nicholas Glinsman at this Youtube link for FACE Market Analysis Webinar & Interviews:


China’s lockdowns to contain Covid have snarled operations at the world’s largest port in Shanghai and stalled activity in major cities, affecting the supply chains of businesses from Tesla to Apple. Trade data on Monday will provide clues to the extent of the damage. Chinese export growth likely slowed to its weakest pace since June 2020, while imports probably contracted for a second month, a sign of weak consumer spending as millions of residents in Shanghai and elsewhere were confined to their homes.

As manufacturer to the world, the disruptions in China are weighing on the global economy and add another risk to the inflation picture. In Shanghai, where most of the population have been under some form of lockdown for more than five weeks, the government is trying to get production back on track. Yet many foreign businesses say they’re still unable to resume operations.

Early indicators for trade aren’t promising. South Korean exports, a barometer of worldwide demand, grew by double digits in April, yet shipments to China dropped, suggesting China’s slowdown is a product of its own Covid restrictions.

China’s inflation data will also be in focus as shortages of food and other goods, also triggered by lockdowns, drive up costs. Consumer price growth is forecast to accelerate, while factory gate inflation likely remained elevated in April.

The Communist Party’s top leaders keep pledging more stimulus to meet an economic growth target of about 5.5% this year, yet so far, it has been a case of words, but little action. Credit data for April due this week will show whether monetary and fiscal support have had the desired effect of stoking borrowing. Meanwhile, Chinese Premier Li Keqiang warned of a “complicated and grave” employment situation. He instructed all government departments and regions to prioritize measures aimed at helping businesses retain jobs and weather the current difficulties, according to a statement late Saturday.

Elsewhere, the US may see another elevated inflation figure, UK gross domestic product data for the first quarter might already hint at stalling growth, and Mexico’s central bank is likely to raise interest rates again.


The April consumer price index report on Wednesday is the highlight of an otherwise quiet week for economic releases. Inflation is projected to have moderated on both a monthly and annual basis, partly reflecting a dip in gasoline prices that have since picked back up. While inflation likely peaked in March at 8.5%, the hottest in four decades, price pressures are expected to remain elevated, keeping Federal Reserve officials on track to steadily lift borrowing costs in the months ahead. 

After the Fed’s half-point increase in the benchmark rate on Wednesday, investors will be monitoring a slew of speeches by central bankers, including John Williams, Christopher Waller, Thomas Barkin and Loretta Mester.

A US measure of prices paid to producers in April is slated for release Thursday and is expected to show some moderation in the pace of wholesale inflation. The week closes out with a reading of consumer sentiment from the University of Michigan.


Outside of China (see above), Asia’s highlights include a rate decision on Wednesday in Malaysia, where officials are likely to buck the global tightening trend as inflation remains tame and downside risks for the economy remain.

After the Reserve Bank of India’s surprise hike, April inflation data will be scrutinized on Thursday as economists reassess their policy forecasts.

Indonesia and the Philippines post first quarter GDP data on Monday and Thursday. In Japan, wages and household spending data will be released early in the week.


Economists forecast a respectable 1% increase in UK GDP for the first quarter, though that may mask a period with no growth at all in March. This data on Thursday will illustrate the backdrop to an outlook that the Bank of England says is turning starkly sour, with double-digit inflation likely to crush any expansion toward the end of the year.

The BOE revealed that scenario on Thursday as it delivered a fourth consecutive rate increase. One perspective on that may emerge on Monday as policy maker Michael Saunders delivers a speech in London.

Germany’s ZEW gauge of investor expectations on Tuesday is forecast by economists to have dropped further in April from a level that was already the worst since the pandemic erupted in 2020.

Euro-area industrial production for March due on Friday probably contracted noticeably. Several European Central Bank policy makers will speak, including President Christine Lagarde on Wednesday.

Among inflation reports due this week, the Czech Republic’s on Tuesday may draw attention, potentially reaching a new high above 13% for April. Russia’s will be yet higher though. Economists anticipate inflation there may have exceeded 18%, a dramatic surge in the space of just two months — effectively doubling since the invasion of Ukraine. The central bank predicts further price surges. 

Other reports include Russian trade data on Wednesday, pointing to the impact of sanctions on imports and exports in March, and car sales figures from April.

In Ghana, data on Wednesday is expected to show inflation accelerated further from almost 20% in March, which was the highest rate in more than a decade. The country’s central bank meets later this month, with economists predicting it could raise rates by as much as 200 basis points.


Mexico on Monday posts both full-month and bi-weekly consumer price data for April ahead of the central bank’s rate decision later in the week. Early estimates see the annual readings leveling off near two-decade highs for both the core and headline results. With inflation now more than twice the 3% target, most analysts expect Banxicoon Thursday to raise the key rate to 7% with a fourth straight half-point hike and eighth straight increase overall. A consensus is building around 8.5% as a likely year-end level for the key rate.

In Brazil, look for April’s annual consumer-price reading on Wednesday to vault past 12%, more than three times the target. After raising its key rate to 12.75% on May 4, the central bank signaled that an 11th straight rate hike is likely for next month. Meanwhile, look for Argentina’s monthly consumer prices to have cooled off after March’s 6.7% jump, even as the annual pace pushed past 56%. Many local economists see that hitting 60% by year-end.

In Peru, the central bank, battling the fastest inflation in two decades, is expected to extend a record tightening cycle and raise the key rate to 5%. As with regional peers, the bank’s not done yet.


*See below at the end of the Ahead of the Herd weekly review, likewise for Europe and Asia-Pacific.

Trying to make sense of the gyrations in the market – May 6th

Did the market really listen to Chair Powell? – May 5th

Listen to what Powell says – May 4th

My inner Milton Friedman keeps me on a more strategic path – May 3rd

May Day, May Day for Risk? & The Devil’s contract (US dollar hegemony) is here to stay – May 2nd


On Thursday, the BoE hiked rates by another 25 basis points. It’s the only central bank that looked into the risk of higher rates on the economy, which we covered on Friday.

On Thursday, we highlighted why the ECB is unable to produce reliable forecasts as it continues to miss any major inflation trend.

Another key topic was our detailed focus on semiconductor supply chains, that paint a dark picture for any corporation or market participant expecting a quick return to “normal” in 2022 (after being wrong in 2021 as well).

Asia Pacific

With all the talks about support from China, there are two key articles worth mentioning. The first, from May 4th Macro, is the Hong Kong economy shrinking due to the Covid restriction.

Asia Pacific Macro – May 4, article 2.1: Hong Kong economy shrinks 4% in first quarter as COVID surge bites – Nikkei Asia

The second is the geopolitical piece from May 3rd, in which we delved into an often misunderstood meeting of the Political Bureau of the Central Committee. While the entire article is important (and actually free), we took the most important excerpt

Capitalism with Chinese Characteristics

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