Reports

… Are restrictive rates finally in reach?

Perhaps the recession is already in the rear-view mirror…

… with wildly divergent trends from UK to Japan

… Here’s how investors can win it.

… Buckle up for a nasty Fed descent

… the Fed swaps a banking heart attack for profitability cancer, but a credit crunch looms

… All Hangs on the Disinflation Data

… Stay alert to the baffling macro transition between nominal and real growth – it will offer trading opportunities

… What are the main risks to our outlook?

… Pricing two pivots into a 2023 soft landing

… The energy war is raging with perilous macro ramifications

… A soft landing stirs

… Watch out Goldilocks!

… Or something more permanent?

… Shall we give macro a chance to rebalance Covid distortions?

… Is a global recession avoidable?

“From famine, war and plague, deliver us o Lord”

Yellen’s 1996 “greasing-the-wheel” observation makes perfect sense now!

Is there a happy ending?

…

A 2022 preview…

… This cycle has more to run (for now!)

Get over it by asking for a pay rise…

Time for a reset?

UK PM Johnson on 11th June 2021 at G7

… Is a monster lurking in the wake of the pandemic?

… or how macro trends led to a revolution of the financial world and the emergence of crypto finance.

… but is it the end of the Growth sector Monarchy?

Why neither Europe nor China truly threatens the global reflation outlook

…

Use the Fed’s hawkish stance tonight to sell US$ ......

“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
The Sun Also Rises. Ernest Hemingway 1926.

A paradigm shift towards slower growth and more hawkish monetary policy-making… China bucks the trend with increased policy activism...

As liquidity dries up and a global slowdown ensues, EM remain most vulnerable…...

Will our hero deliver higher wages? How can the Fed help?...

It would be an error of judgment for the ECB to stand in the way......

https://www.youtube.com/watch?v=vQLNS3HWfCM...

Michigan: “Households in top 1/3 income tier (the ones spending and owning stocks ...) cited significantly greater concerns with government economic policy”...

First punch them in the face... then negotiate a weak US$...

Is there really a choice?...

The "Big Short Vol" is finally taking its toll, beware a prolonged equity sell-off as it could become self-fulfilling......

Finally pricing out the post-GFC trauma?...

......

Stay on front-end curve alert!...

Success breeds complacency. Complacency breeds failure....

Watch leverage indicators like a hawk...

Is ISM delusional? ... the widening gap between perception and reality...

Until inflation expectations start plunging......

Washington decides...

Don’t risk missing the 2nd part of JDI’s 2017 best trade: Long EUR and short USD......

Or an accident of history......

But they are only cooking up higher rates......

...Is not a dramatic departure from decades of monetary policy setting...

Inclusive capitalism “is about delivering a basic social contract comprised of relative equality of outcomes; equality of opportunity; and fairness across generations”, Mark Carney, BoE....

The fiscal stimulus considered by Trump’s administration will not deliver the productivity shock necessary to allow the US to snap out of the growth purgatory...

Keeping my fingers crossed that the above title marks an inflexion point in volatility!...

If voting could change anything, it would have been forbidden a long time ago (Coluche, a late French humorist who had great political ambitions...)...

Back to growth purgatory......

Is the Fed truly dovish?...

But growth and reflation may hit a wall in Q2......

This report delves into the reasons to sell USD with conviction......

Running out of reasons to avoid Emerging Markets......

Sounds "great" but it is much more complicated ......

Optimism – more than any policy announcements – is what will revive the macroeconomic cycle...

The high pressure economy has never deliberately been experimented, how far is the Fed really willing to go ?...

Being bullish European stocks does not require to be bullish the Euro project......

Little did we know Trump was the one who would be CO-operating with the BoJ ......

Will he?...

All eyes are on the beneficial effects of a commodity bounce but the effective tax on the consumer may bite ......

Is the glass half full or half empty?...

“Governments know that the ECB stimulus will not be forever.” (Draghi)...

Stay constructive on risk despite the BoJ-induced confusion ......

The steepenening temptation returns & QE gets globally priced out...

Don't push it......

Far from explicitly adopting "optimum control" the Fed's reaction function remains one of "Stop and Go". It is soon time for Go, once again......

Expect the liquidity wave to continue to trickle into all asset classes including Emerging Markets (high yielders favoured over the Asian low yielders)...

In the last report on July 5th, I discussed at length the possibility of Central Banks passing the baton to the Finance Ministries as a main threat to my positive view on long end fixed income at a time when it had largely become consensus......

Secular stagnation is settling in but becoming consensus ......

Let us all be clear, I have no crystal ball and although I do believe that remain will be the outcome of the referendum; it is also what 90% portfolio managers I speak to believe, which really puts us in a bit of a pickle as to the best way to strategize and monetise a view over the event....

The long bond has continued to be the A trade, over the past week with the USD still caught between flight to safety flows and a less promising domestic macroeconomic backdrop......

My view has been more neutral on the USD recently after a successful foray into longs (closed after the hawkish fed minutes) and I have been thinking long and hard about it today. I want to re-enter short USD and decided to pick CAD ......

Position for an extended purgatory time as the mediocre growth backdrop could last an eternity ......

As opposed to Dec 2015, the concerted Q1 monetary stimulus and synchronized mini credit cycles offer the ideal window of opportunity for a Fed hike - Risk should remain supported into the June or July hike....

It is tempting to take profit on long USD initiated on the last piece following a great run but the Fed is not likely to show its dovish hand again in the short-term, which means that the trade still has legs for reasons we expose in today's report......

I took profit in all USD short versus risk-on FX position last Friday on a view that all my long term price targets had been hit in EM FX and that EUR and JPY strength would cause a VAR shock. I think it is fair to say that this VAR shock has happened. In the process, USD hit a cyclical low before storming back on Tuesday and marking impressive reversal signals (see chart above). A clear inflection point (it is no surprise that it was on the same day die-hard USD bulls started to soften their stance and on the day the controversial Shanghai accord was finally confirmed as part of the new treasury FX report) that most likely marks the end of the 2016 USD bear trend theme that I have been riding successfully since January....

With the perception that China's long awaited and much analyzed economic disaster is still in the making, it has been difficult to embrace fully the market implications of the current debtfueled growth bounce....

Global assets have danced over the past 18months to the rhythm of the perceived tail risks around the 2 largest global growth engine: China and the US...

The Fed is the only reflationary game left in town before the BoJ and ECB go to the next stage, but wouldn’t you rather have the Fed have your back than the BoJ and ECB ?...