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…

MACRO Macro picture is still focused on inflationary pressures and slowing growth as the estimate of US GDP growth was revised down from 2.4% to 2.1% for Q2 23. On the supply side there are many inputs which cannot be directly impacted by fiscal or monetary policymakers. So far this year we had unwinding of some of the the supply shocks from the pandemic era. Supply bottle necks have been…

MACRO Financial health of a consumer is back in focus as the cumulative excess savings are in decline. If this excess savings turn negative, consumers will start to draw on credit, which with a current restrictive credit conditions and high interest rates may force them to significantly reduce consumption. Currently US consumer still remains resilient due to strength of the labor market. This month inflation and interest rates narrative has…

MACRO This weeks macro focus was on slowing growth in China, and how this may affect global economy. US consumer still remains strong with shrinking but still reasonably large cash reserves (10.6% of total household assets), above the pre-covid cash reserves (10.5% of assets), and significantly above pre-GFC reserves (9%). Student loan repayments starts in October and will affects 48 million consumers who need to start repaying over $200 per…

MACRO US had already a few good quarters of growth after pandemic. Last quarter US had a significant growth in productivity, and most recent employment report shows modest increase in hours and payroll, which can indicate further boost in productivity. This is how we could have a strong labor market without pressure on inflation, which can secure soft landing, however most analysts haven’t taken at least a mild recession of…

MACRO We are in a new regime of higher global costs of capital and increased probability of tail risks due to intensified geopolitical tensions. Geopolitical fragmentation caused by competition between US and Chaina and emergence of the competing blocks, which is set to rewire global supply chain. This can also strengthen position of selected emerging and frontier economies which will be able to offer more politically stable and cheaper alternative.…