Despite inflation not dropping to the extent our models had suggested, the ECB has still been dovishly surprised relative to its base case. Will the ECB prepare for cuts at the meeting this week?
Watch Series
The “Watch Series” is a collection of individual series such as Europolitics Watch, Inflation Watch, Real Estate watch and much more. Stay tuned for in-depth coverage of your favourite subjects.
Portfolio Watch: What if we add a rate cut to this fire..
The cyclical rotation is slowly but surely rolling and if central banks add rate cuts to this mix, we are staring directly into the melt up.
EUR-flation Watch: Hands down, I was wrong..
Disinflation is simply not happening as fast as anticipated by our models, but base effects remain very benign in coming months. The stickiness in services is eye-catching, but there is light at the end of the tunnel for the ECB.
This is why Biden’s sanctions aren’t working
How well is Russia’s economy doing two years into the war? And how will the upcoming election play out? Read our explainer
Money Watch: Trillions of USDs are waiting to be unleashed
Money growth has improved lately in the US, while there are trillions parked on the time deposit / MMF side-lines. If the Fed cuts rates into the current rally, we may see another 2021/2022 melt-up.
Positioning Watch – Commodities are finally moving
Commodities positioning have remained fairly silent over the past few weeks, but we are seeing early signs of appetite for cyclical commodities now. Early innings of a cyclical rebound or just noise?
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Energy Cable #58: MASSIVE bottlenecks and abundances in shipping and energy space
Nat Gas levels are far below sector break-evens, making it a tug of war between short-sellers (mainly CTAs) and producers. Nat Gas looks like a bargain, but let’s see whether the chicken comes home to roost.
Macro Nugget: MAJOR tradeable gap opening between Germany and the US
The gap between trends in forward looking inflation indicators in Germany and the US is striking and increasing. This may be the most important macro trend right now..
EUR-flation Watch: A major surprise is needed in February
The ECB is scared of acting ahead of the Fed, why a substantial dovish surprise is needed in February HICP to bring about a decent probability of spring action from the ECB. Find our updated now-casts here.
Energy Watch: Is Nat Gas THE macro case of 2024?
If the manufacturing cycle is indeed improving, Natural Gas is starting to look extremely cheap. Here is the case..
Trade Alert: More Gas To The Cycle
We add to our cyclical rotation, while we take profit in our very profitable tech bets.
Labour Nugget: Could the next move be a hike?
Powell keeps referring to a labor market getting into better balance, but is the labour market really moving into a better balance? It is highly doubtful after watching these two charts.
Positioning Watch – Low FX volatility provides cheap leverage for a rebound in manufacturing
If a rebound in manufacturing is truly happening, current dynamics in FX option markets provide cheap leverage and good opportunities to capitalize on our trading ideas. In the equity space, broad momentum is slowly creeping back in ETF fund flows, and the early reacceleration in prices haven’t affected sentiment it seems.
Trade Alert: Betting on a cyclical comeback
Forward-looking indicators are telling us that the cyclical momentum will return. Here is how we trade it!
Energy Cable: All the upside left in Henry Hub
Is Nat Gas suddenly the cheapest macro asset on earth? Natural Gas prices are through the floor, which dynamics have improved in the oil space. Let’s have a look at it.
Portfolio Watch – Have markets traded the cyclical rebound in advance?
Markets have started to factor in good news as bullish, which all of a sudden makes market pricing (on equities mostly) indicative of economic expectations once again. Are there still opportunities in the cyclical momentum?
Labour Watch: Can ECB cut rates with these pay rises?
Christina Lagarde says wage data will be “critically important” in deciding when to loosen monetary policy in the EU. So naturally, Steno Research takes inventory of ongoing labour negotiations and rising pay in the EU.
Shipping Watch: Looks like container rates have topped for now
Container rates have peaked for now, but without progress in the Red Sea, there is a risk of a return of higher rates by the spring-time. The damage for US inflation has likely already been done, but we see signs of exhaustion in the long energy bet.
G3 Inflation/Wage Watch: US inflation will not return to 2% this cycle
More and more signs point to a plateau in inflation in the US, which makes a return to 2% tough in this cycle. The odds are better in the Eurozone, while the UK remains a basket case.
USD inflation review: Powell has to invent a new measure..
Another smoking hot inflation report in the “sticky” categories. Shelter is re-accelerating, while wage-heavy categories continue to surprise on the upside. Goods deflation remains ongoing.
Trade Alert: Booking some profits
We have closed a position. Read which and P&L below
Positioning Watch – Has the sudden change in rates pricing changed positioning?
From 200 bps worth of cuts priced in for June across the big 3 CBs in the start of January to 100 bps now. Does it move the needle or is everybody still on the risk-wagon?
Energy Cable: The rollercoaster in crude oil continues
Last week we were close to writing our obituary on our crude oil long position and this week we are almost back in green. The last few weeks in crude have surely been something!
UK CPI Nugget: Is something wrong with services?
Markets betting on one of the softest MoM services CPI prints in UK inflation history in January. Feasible? Yes, but…
Portfolio Watch: NVDA or Bust?
US tech has been our saving grace, and we’re reaching a point where it’s legitimate to ask if there’s any point in doing anything other than buying NVDA?
USD Inflation Watch: Softer than recently seen – May back in play!
With revisions out of the way, we can look forward to the US CPI report on Tuesday. Everything points towards a softening and a May cut should be back in focus!
Suez Watch: Euro demand cannot cope with these prices!
Freight rates have started to level off, but remember that this is the “soft season” for shipping volumes. From March and onwards, the shipping volumes will accelerate sharply.
Labour Watch: Why you should pay attention to the Border
A lot has been said about the Non Farm Payroll report last week yet we believe certain aspects have still largely flown under the radar. Read which below
Inflation Watch: Adjusting for revisions, tax, seasonality and sunspots
The revised weights -and seasonal patterns will be revealed by the BLS on Friday, while we will get the updated weights from Europe alongside an understanding of the tax impact on HICP inflation.