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Week 43
Macro US GDP seasonally adjusted growth was at 4.9% annualized in the July-through-September period; biggest gain since Q4 2021. This unexpectedly strong reading is supported by increases in inventories, exports and governemnt spending, but most importantly by increase in the consumer spending. Consumer’s went on the shoping spree in the last months of summer which…
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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…
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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…
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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…
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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…
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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…
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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…
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Week 36
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…
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Week 35
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…
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Week 34
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…