Crude prices haven’t responded to output delays as hoped, and we wonder whether that will prompt the alliance to change its strategy.
Something for your Espresso: The Anglo-Saxon labour market malaise
The UK labor market is also clearly weakening, which typically occurs with a time lag following weakness in the US labor market. The Eurozone lags further behind due to its more bureaucratic labor market regulations.
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EM Watch: China was WEAKENING even before the decline in Western demand
While we are waiting for Godot and his assessment of Payrolls, we take a look at Chinese momentum in the context of declining demand in the West. Are the wheels coming off in China?
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Macro Nugget: Germany has never recovered from the energy crisis
Both IP and construction continue to look weak!
Macro Nugget: Germany better stay good friends with the Americans
Germany is experiencing a bit of a China shock.
Something for your Espresso: How bad is the employment situation?
Thoughts on today ISM’s service report and crude oil along with updates from our models. The risk environment remains very fragile and we continue to like net short positions in Equities and Commodities.
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Something for your Espresso: What do our models say after yesterday’s bloodbath?
The growth scare is spreading as China has come to a sudden stop. Is the commodity land-slide over?
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Energy Cable/Great Game: OPEC, things could get ugly!
Beginning this week, we’re merging our weekly coverage of the energy/commodity space and geopolitics. This will allow us to be even more actionable and specific when analyzing global events, as the ramifications of war and peace are most often felt in the commodity space.
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Macro Nugget: Roadblocks for a dovish Powell
Seasonal factors will be working against Powell in the fall and winter
Macro Nugget: The head-fake business cycle strikes again
The manufacturing rebound in H1 2024 was another head-fake
Portfolio Watch: Preparing for a nasty September due to liquidity
Two overwhelming themes are at the top of our watchlist for September: fading USD liquidity and a sudden halt in Chinese activity. Here’s how we plan to address them.
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Macro Nugget: No credit, no growth
More on the weakness in China
Macro Nugget: All eyes on German inflation
Something for the German hawks to consider!
Something for your Espresso: Approaching the September season!
The dog days are over, and we typically see some interesting patterns into September. This year is potentially special as the Fed will start cutting rates, but we wouldn’t rule out a dash for USD cash alongside it.
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Macro Nugget: OPEC Moves May Destabilize Oil Prices
Goldman Sachs raises alarms over potential OPEC supply increases that could disrupt global oil markets.
Ifo Watch: Is Germany flirting with a recession?
The latest Ifo data suggests an imminent recession in Germany, with expectations of slowing growth and inflation as autumn approaches. Despite concerning trends, high frequency and robust data provide a basis for cautious optimism, indicating stable conditions.
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Something for your Espresso: An avalanche in USDCNY?
Can a Chinese repatriation flow turn into the next JPY story? The market remains max short CNH (and CNY to the extent possible), and if Powell pulls the rug from under USD rates forward pricing, it may alter the picture.
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Macro Nugget: Trade tariffs helping very little!
Like water, trade tends to find a way around barriers.
Energy Cable: On the inventory build-up due to China-tariffs
The Chinese rebound story is losing momentum fast, which has important implications for Western economies and assets, while the impact from freight rates on inflation might not be as large as previously feared.
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Macro Nugget: More on the structual shift in China
Chinese retail sales 9% off its pre-pandemic trend
Something for your Espresso: 1 out of 2 game masters pointing USDJPY lower
Ueda is not ready to abandon his normalization plans, while Powell is likely to align his viewpoint with that of the Federal Open Market Committee later. Currently, one out of two central bankers is signaling a downward trend for USD/JPY, and soon, both may point lower.
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Macro Nugget: Gold living a life of its own!
Gold and its correlation with real rates has flipped after the war in Ukraine.
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Something for your Espresso: Why did Powell hide all of these details in July?
Powell was oddly out of sync with the committee in July, choosing to withhold many dovish details from the public during the subsequent press conference. Is Powell becoming the odd hawk out in the committee?
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Macro Nugget: BLS revision gives clear recession indication
…But it is a lot more tricky this time
Something for your Espresso: Suddenly we ONLY care about labor markets
Suddenly, everyone is paying attention to labor markets as signs of weakness begin to emerge. The annual revisions to the NFP data, along with the FOMC minutes, will be the key market drivers today.
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Macro Nugget: US residential construction looking bad!
Construction spending has been driven mainly by the manufacturing sector
Something for your Espresso: Everything is (almost) back to square one
The market is almost back to where it was in mid-July, except for the USD versus Asian FX and commodities. Is there any signal value in what’s rebounding and what’s not?
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Macro Nugget: China is killing the commodity super cycle
Low margins and high stock levels mean that China will export its excess capacity.
Energy Cable: China is killing the commodity super cycle
There is still a substantial weakness in the Chinese domestic cycle, which impacts the overall commodity cycle. Gold is one of the few commodities that hasn’t been a victim of the Chinese cycle, but is the sell-off broadly over in commodities? Doubtful.
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Macro Nugget: Is this beginning to smell like a US recession?
Unemployment and housing have worsen over the course of July!
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