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Ulrik Simmelholt

Something for your Espresso: Someone forgot to tell the US Manufacturing cycle that we are in slowdown

Something for your Espresso: Someone forgot to tell the US Manufacturing cycle that we are in slowdown

The Philly Fed survey was the strongest seen in quarters, indicating that the manufacturing cycle in the U.S. is now gaining some momentum beneath the surface. Meanwhile, Japan reported a moderately high inflation rate, and the ECB appears to be on a mental vacation.

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Energy Cable: Copper prices are too high!

Energy Cable: Copper prices are too high!

The inventory data is starting to support our bearish view on copper, while the precious metals story depends on whether we are in a bull- or bear-steepening scenario. Loads of copper will arrive on Western exchanges before the end of the month.

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Labor Watch: This doesn’t exactly scream recession (yet) …

Labor Watch: This doesn’t exactly scream recession (yet) …

Take aways:  This currently looks more like normalization than weakening  More fuel to the story of an income driven cycle The productivity / disinflation story of ‘23 likely a hoax The post Covid labor market has been especially good for low skilled workers Welcome to this short labor market watch on the back of this week’s NFIB and CPI numbers. Currently the labor market has softened considerably from tight conditions in 2022, yet there is still some time before this slowdown potentially leads to a recession. From the NFIB numbers we already got more hints of the deflationary trends suggested by this month’s CPI report as price plans continue their decrease. For more on the CPI release, you can find our breakdown here.  Chart 1: Currently this looks more like normalization than recession  From the dashboard below our main takeaway is the lack of recessionary vibe that pockets of the market are screaming about. The optimism index has been rising over the past quarter and inflation is still looking like a far greater threat to small businesses than interest rates. Also noticeable is the drop in price plans for the next 3 months which has been grinding lower over the last quarter fueling the disinflationary story in the US… Small businesses giving Powell the green light to start rate cuts if yesterday’s CPI report wasn’t enough?  In the job component there’s a notable disparity between job openings and employee compensation, with the gap reaching its third lowest level since 2000. […]

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Energy Cable: Copper prices are too high!

Energy Cable: Increases in freight rates not transferring into goods inflation (for now)

Crude oil’s strong performance and rising freight rates signal potential inflation pressures, despite current weaknesses in goods inflation and metal prices. The market is though not overly scared of it (yet), but the curve steepening is a first hint of something brewing beneath the surface.

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Energy Cable: Copper prices are too high!

Energy Cable: Commodities, Freight Rates and Goods imports are rising and you tell us that demand is weak?

A soft inflation report was apparently exactly what the Commodity space needed to fuel another move higher. Softening (lagged) inflation numbers such as rents, will help solidify the re-inflation loop, which looks increasingly bullish to us.

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