Something for your Espresso is the Daily morning research letter from Steno Research. Occasional morning letters for the US based audience is also send out under the name Good Morning America
While markets have sought shelter in both Europe and China as U.S. growth weakens, we are now starting to see the first signs of a more global slowdown—one of the clearest signals to be long bonds.
This week is all about the Fed, central banks, and how they respond to the ongoing slowdown of the U.S. economy—mainly caused by the sitting president. Will they start supporting the economy and equities now, or will they stay data-dependent and wait until the effects of the current policy mix have fully materialized?
Everyone and their mother expects inflation to pick up due to tariffs and while that is a natural conclusion, it may take at least 2-3 months from here and we may get very soft inflation data in the meantime! Position accordingly
With headlines constantly being a headache for markets, it almost looks like Trump loves to see equity markets bleed. It raises the question of whether he actually has a pain threshold in equities or if immediate political victories matter more.
The headline hockey from the White House is reaching extremes as even The Donald disagrees with himself intraday it seems. US equities will not find a bottom until calm is restored in the white house, while bond yields aim for 3.75%!
With recession chatter hitting the headlines once again, it’s time to discuss whether we will actually get a recession this time or if it presents a decent buying opportunity in US risk assets ahead of CPI tomorrow.
With the US CPI report being the main event this week, we allow ourselves to use this piece to lay out all of our thoughts and, most importantly, how to position for it!
We are seeing extreme amounts of fear in US equities at the moment, and typically that is a good sign to start getting back into risk assets. However, we might need to witness a nasty NFP report before the true buying opportunities arise.
The constant flip-flopping from Trump on tariffs is hurting markets and the US economy, and a material risk-off environment in risk assets is right around the corner if he continues.
Germany is looking to remove the debt brake to fund €500 billion worth of defense spending, but could this be the start of a paradigm shift? Europe continues to perform, while Trump is slowly but surely steering the US economy toward the abyss.
The growth scare is here in the US, and Trump is currently ruining all hopes of a soft landing (it seems). Will the Fed act if the soft landing is at risk of being canceled? Not unlikely, and it will serve as the ultimate signal to load up on risk.
After two weeks of silence in the economic calendar, we are back in full swing with ISM Manufacturing, ISM Services, and NFP being released this week, which is the ultimate test for our weakening growth thesis.
It’s incredibly tough to trade the current tariff environment, as there is—as we have alluded to before—zero edge in trying to predict the next steps of Trump and his administration. When zooming out, the best macro play is simply to buy bonds and go home.
Growth continues to weaken in our model package, and it’s a signal that has historically been costly to bet against. This leaves us with little reason not to stay long US fixed income and short the USD while avoiding excessive exposure to US equities.
Tariff headlines continue to wrongfoot market participants, leaving the market misallocated relative to fundamentals. Today’s Chinese copper rally is the latest example—watch out!
Our models continue to suggest that growth will come down in the U.S. (and China), while Eurozone growth for now is holding up remarkably well. What is the playbook as we go into March, where DOGE and weaker sentiment will lead growth lower?
With the economic calendar silent for yet another week, it’s all about being on top of the underlying macro trends, which look to continue even with a couple of inflation prints on Friday, while NVIDIA earnings on Wednesday is the big macro risk this week.
We are seeing pretty firm signs that the tariff premium in commodities like gold, copper, and the like will fade going forward, making it less compelling to chase metals prices higher.
The January meeting minutes were much softer than expected, and QT is set to come to a halt this spring, with some inflationary effects being overlooked. This should pave the way for a weaker USD.
We are still firm in our view that European macro will start to gain speed relative to the U.S., and there are plenty of ways to play it, both in equities and rates!
Asian equities are suddenly in the limelight again as tech optimism grows in China – is it time to get in? We are not far off.
With no major data releases to challenge market momentum, this week is all about following the trends – the USD and USD bond yields will continue lower while European equities and gold will continue to rally are our clear convictions!
The reciprocal tariffs were staged as a major gamechanger for markets and global trade trends, but we haven’t gotten any meaningful messages yet. Are reciprocal tariffs just a negotiation tool turned global?
European equities are flagged all over our model package as the best trade on earth currently as the US and European macro cycle starts to diverge—meanwhile, China is back in the abyss after a massive move in Hang Seng this morning.
Relative value is the keyword in this tariff madness, as everything is moving further away from fundamentals as we speak. Loads of value in both commodities and rates bets here!
Right as we thought tariff talks were bad for growth and slightly inflationary in the short-term risk assets and global equities are celebrating like we were in a Gung Ho environment – what’s going on?
While the tariff headline continues, underlying developments in macro suggest that the disinflationary environment continues in the US economy – bond yields will come down this week!
With NFP coming up later today, we have compiled the best charts and observations to look at ahead of the report.
It’s pretty clear now that Trump, Bessent and Powell are working in unison to bring down long-end bond yields, which is the clear trend now in Fixed Income as global bond indices are heavily bid.
Trump is increasing uncertainty and hurting both the economy and risk assets in an attempt to do the opposite. Are there ways to shield yourself from the ongoing geopolitical landscape? We believe so!