Steno Signals is our weekly editorial on everything macro. The byline of the editorial is Andreas Steno Larsen, former chief strategist at Nordea Bank and CEO of Steno Research.
European electricity markets are completely out of sync with fundamentals and we have spent most of this week understanding why – here is our take-away!
The media is full of doom and gloom around Europe, and even though the situation is admittedly bad, I tend to think that the likely outcome is less bad than feared by many. Here is why!
Germany is doing MUCH better than reported on the Nat Gas front, while everyone seems to agree upon a European zombie-apocalypse scenario making July/August the most hated rally ever.
Is this a return to a 70s-like fight between inflation and recession? The energy supply scarcity is likely to bring about yuge business cycle volatility in coming years until the situation is settled.
What happens in markets when the ISM Manufacturing index drops below 50 over the next quarter? We have looked across all assets with interesting findings.
We have talked over and over about supply during the past 12 months, but it is now time to talk about demand. Go short the business cycle and buy USD.
The current supply squeeze is one of the worst seen ever. The disconnect between demand fundamentals and food- and energy prices is simply eye-catching. Watch the downside, but not yet.
Duration has been “killed” by financial markets over the past year, which carries repercussions for all asset classes. How can you track duration across assets and is the duration sell-off over?
Inflation runs markets currently as it seems as if growth has become irrelevant for policy makers, but will such a narrative pass a reality test? I doubt it. Growth will re-enter the limelight soon!
Inflation is not going to peak in Q1 as the most recent price developments in energy- and food prices will lead inflation much higher in Q2. So, the question is now; How do you trade stagflation?
I remain of the view that it is inadvisable to make large portfolio changes during Geopolitical turbulence. Markets remain lukewarm despite the Russian aggression, so let’s look at the medium-term.
A lot of investors are rightfully scared that Russia is about to invade Ukraine. It almost never pays to bet on geopolitical turbulence and the current situation may prove to be a decent opportunity.
The current inflation is mainly a result of lagged consequences of the pandemic trends, but as these trends are about to reverse, we may experience the disinflationary part of the pandemic soon.
Everyone currently panic about high inflation and a weak labour supply, which has catapulted front-end pricing central banks higher. I would prefer to not take a bet against gravity!
