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Week 4
Macro Inflation data shows that prices are on a steady decline path, supporting the Fed’s easing case. Both PCE and PCE deflator are now almost reaching the level seen before the pandemic. On the other hand, strong spending and stable GDP growth point to a soft landing. These two effects combined created a Goldilocks scenario…
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Week 52
Macro A year ago, economists concluded that getting inflation under control would require a spike in unemployment and a recession. During the year, inflation has come down faster than the event in the most optimistic forecast, while the economy maintained a robust growth number.US growth was promoted by fiscal stimulus, which positively impacted consumer spending…
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Week 51
Macro The FED has a chair with a very dovish message, and the committee members are walking it back. But even with J. Powell’s dovish tone, markets have been already well ahead of the FED. Bonds have rallied, and financial conditions have eased, which could create more inflationary pressure. The concern is that the market…
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Week 50
Macro This week, Jay Powell has surprised everyone and gave a festive giveaway to global markets. For the first time, he confirmed the assessment that the inflation is easing and going in the right direction. The meeting was mostly centred on the Summary of Economic Projections (SEP, also known as “the dot plot”), which changed…
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Week 49
Macro Analysis of markets has been challenging as the economic models lost a large portion of their economic power due to the amount of fiscal and monetary stimulus. In addition, till October, we had ‘bear steepening’, which is very rare with few past instances and a patchy precedence for what follows. The consumer is slowing…
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Week 48
Macro … Pending … Rates End of the hiking cycle. The narrative has shifted away from higher for longer, and the market is rapidly recalibrating yields. The expectation is that rate cuts will start early next year, with FED funds futures now pricing a 60% chance of a 25 bps cut in March. It is…
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Week 47
Macro The US economy handled higher interest rates better than anyone anticipated despite multiple issues affecting the global economy. Although some restrictive monetary policy effects remain to be seen, the US remains an attractive destination for investors’ capital. The focus of the weekly update is more tactical, but it is worth acknowledging a few strategic…
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Week 46
Macro Throughout the year US economy kept demonstrating its strength through continued strong economic growth. This has been achieved despite the rate-tightening cycle, but economists expect a slowdown in employment, which will have a negative impact on the GDP – a key determinant of the return on capital. Analysts expect that the boost to productivity…
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Week 45
Macro U.S. economy has proven to be consistently resilient in the face of many headwinds. US is a $25t economy, in 77% represented by services, and 68% represented by consumer which remains resilient. Question is how long would it last given shrinking savings. Source: FT Consumer demand is also continued to be supported by demand…
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Week 44
Macro Outside of the US, investors focus remains on changes taking place in the second largest economy. China has heavy debt burden while it’s population is shrinking and its productivity gains are slowing. Chinese cash reserves are expected to decline, as aging population will start spending their savings. Urbanization rate has slowed significantly, and the…