Week 42

MACRO Investors observe generally weakening global economic backdrop. This is a reflection of the rapid tightening cycle, which continues despite the softening global growth. There are fiscal concerns around growing deficits and increasing debt servicing costs caused by the higher rates, as they may lead to the financial instability. Simultaneous quantitative tightening (QT) and increased issuance absorbs most of the available liquidity, and pushes funding costs higher which adds further…

Week 41

MACRO On the inflation front, we see overall more downward pressures. Over many months increases in rents had a significantly impact on the core inflation, given it’s over 40% weights in the index and steady increase of its contribution since mid 2021. With recent stabilization of the US housing and rental market, there should be smoothing impact on the core inflation estimate. Also prices of core goods (ex food and…

Week 40

Macro Equity and bond prices took a hit on Tuesday, after reporting hot JOLTS data (Job Openings and Labor Turnover Survey). Available positions rose to 9.6m from under 8.9m (revised) in July, with little change to hirings (5.9m) and quit rate (2.3%). The good news “ongoing strength in the US labor market” was interpreted as bad news for equities, because it increased odds that the FED will hike again. Some…

Week 39

MACRO Economy remain resilient but majority of economists are expecting things to start turning over. Financial conditions index has declined significantly, driven by higher yields, stronger dollar and increase in oil and energy costs. Discomfort is mostly caused by rates being over 5% and lags in the economy to fully reflect their impact. In addition economists worry about weakening consumer with depleting savings and moving up delinquencies rates. They point…

Week 38

Macro Macro data remains inconsistent, with US remaining strong but global growth generally rolling over. Outside of US focus remains on the Chinese economy, with worrying decline in the households wealth (about 70% of which is linked to distressed property sector) and their rapidly falling propensity to consume. Government is pushing local authorities to increase infrastructure projects and sponsor them through bond issuance. For the US economy, concerns are mostly…

Week 37

MACRO This week we had many headlines about risk of more sticky inflation caused by continuous wage growth. Investors are slowly loosing hope for return to easy monetary policy maintained for over a decade and start to see past years as an anomaly. Higher costs of capital becoming a new norm, and requiring companies to operate more efficiently. This can separate companies which are more productive and are able to…