Salient to Investors:

Joseph Lupton et al at JPMorgan said:

  • The US economy will grow 3% in Q3 and into 2015, while China growth will be below its 7.5% average of the past 8 quarters.
  • The US is mostly the dog that wags the tail: each 1% change in US demand alters GDP elsewhere by 0.8%, twice the impact of 1% change in China, alters developed economies by 0.9%, or 4 times the impact of China, and alters emerging markets by 0.7%,  or the impact of China.
  • The benefits of stronger US growth are felt across the globe while the spillover from a China slowdown is concentrated in other emerging market economies.
  • The upturn in US spending on capital equipment should offset the effect of China’s slowdown on emerging nations.
  • Global inflation as low as 1% in the current quarter should boost purchasing power, underpinning consumer demand.
  • Global goods demand is basically solid.

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