The Watch Series
Rewind the Clock – Back to the 80’s ?
Economic stability coupled with low rates and lack of effective regulation have led minor banks to take considerable risks chasing profits. Now the chickens are coming home to roost- and we have seen it before.
5 Things We Watch: The BTFP, US and EU Deposit Flights, Credit Tightening, and The FFR
The recent turbulence in the banking system has been for the history books. It may have cost the lives of some banks on both sides of the pond, but has the situation finally dialed down? We turn to our timeliest gauges on the deposit flight crisis and weigh up how to position for it.
Demographics Watch – A Public Debt Timebomb
Welcome to a new Demographics Watch! We will take a deep dive into public debt and how it’s related to birth rates and ageing population. If you want to go even deeper into our numbers, we have set up a Demographics page on our Datahub, where you can play around with the numbers yourself. It’s for Premium users only – but you can try it out for free with a 14-day trial. Demographics Watch – A Public Debt Timebomb In our first Demographics Watch article, we introduced ‘The Problem Index’ – a measure of a country’s ability to deal with an ageing population. Weighing the pull and push forces of growing dependency (an increasing older population relying on its diminishing working age population) and migration (as one potential way to fill this gap), we outlined the countries most vulnerable to a continuation, or worsening of current demographic trends. Unsurprisingly, it didn’t make for comfortable reading anywhere, but the index suggested two major problem regions – Eastern and Southern Europe, and East Asia. We also highlighted that the Problem Index would serve as the groundwork on which we’d build. Today, we want to expand upon the pure demographic trends explored by considering the second order economic impacts captured by the Problem Index – namely, an ageing population’s impact on a country’s public debt. Before we delve into the forecasts and data itself, a brief 101. The theory itself is relatively straightforward: ageing populations – people living longer […]
The Energy Cable #13 – Oil – Bull Case Approaching?
Energy has been one of the clear victims of the banking stress, but a more positive outlook may re-surface once the dust settles. Is it time to get upbeat on oil prices? Andreas and Warren disagree.
Money Watch: How do we track deposit flights?
While good old balance sheet data is only available once banks publish their books, we have looked up metrics reported more frequently, which you can follow to give you an overview of just how bad conditions are for banks.
Money Watch: European bank loan books look worse than US peers
European counterparts too have suffered from contagion from the turmoil unfolding in the US banking system, but have troubles been contained or will we see further spillovers take its toll? Europe is better equipped to deal with a liquidity crisis, but a credit crisis will hit Europe more than the US.
Money Watch: Is the BTFP just another form of QE?
A new abbreviation has made its way into the vocabulary of those with an interest in finance, markets, the state of the economy or all of the above. So, what is this ‘Bank Term Funding Program’, and does it really differ from QE in nature?
Equity watch: Fire-sale or Outright Fire in US Bank Stocks
What a couple weeks! Confidence in the US banking system has been under immense stress, and some contagion crossed the Atlantic and struck Europe as well. Triggered by a casino in disguise, the troubles have for now been backstopped, but is further distress lurking beneath the surface?
Energy Cable #12 – Banking crisis seeping into energy
Energy prices- and stocks have suffered due to the banking crisis as it flows through to the real economy. Was this the actual recession trigger? If so, it may be too early to tilt positive on Energy and underlyingly our models have rather turned more bearish than they already were over the past weeks.
Find out what to expect from Gas, electricity and oil markets below!
Fed Watch: 25bps that they will woefully regret
The FOMC will likely decide to raise the Fed Funds target range by 25bps and regret it soon thereafter on Wednesday. Everything but the banking sector stress screams higher interest rates, why the Fed will attempt to regain control of the narrative.
Flow Watch: Any buyers left?
What a week. Let’s have a look at flow and positioning indicators. Some of them will surprise you
Europolitics Watch: Are EU banks actually less exposed?
Are EU banks more solid and protected from bank runs and instability in the banking system? Have the EU set up safe-guards that will keep the European Banks safe? We take a closer look and are not overly convinced.
Fixed Income Watch: Zooming in on the curve steepening
What happens when the curve steepens? It is bad good news for commodities, mixed news for equities and often temporarily good news for the USD except against JPY. Here is why..
The Energy Cable #11: Trust the plan
The Energy Cable #11: Trust the plan Our price models are deteriorating under the surface. The oil and gas bull market is probably not around the corner. We look at risk/reward in the energy space in the context of the recessionary vibes stemming from the banking crisis. We know, we know … You are all focused on the banking drama in the US and its potential contagion to other markets. We wouldn’t want to let you down on a fresh Energy Cable, however we promise to be brief. Our latest model updates do not hint of a bull-market in energy around the corner. Rather the contrary. Let’s have a look at the risk/reward across oil, nat gas and metals in the context of the ongoing banking crisis. Steno Research: China bought as much energy as they usually do in 2022. Forget about the “reopening story” in Energy Loyal readers will know that we have remained very skeptical about the bullish outlook for energy on the back of the Chinese reopening. Lo and behold, we have some more data to back up that point. The ‘Europe is doomed once China starts to bid for LNG’ story has been the go to story by doomsday sayers and other charlatans but we just don’t see it. Firstly let’s just compare the Chinese demand for LNG imports with Japan. 2023 has seen Japanese demand converging towards Chinese. Moving on to the average LNG import by China. In a lockdown year China […]
Inflation Watch: 7 charts on inflation even though no one cares
We focus on three categories in today’s inflation print from the US. Shelter, Medical Services and Transportation Services. Overall, we find risks to be on the downside for inflation but mostly in March/April.
Positioning Watch: How big were the SVB flows?
Let’s have a look at our flow -and positioning indicators after a week of market turbulence. How big were the SVB-fueled flows on Thursday and Friday? We look across assets in this analysis.
Money Watch: Have people forgotten that everything is about money? Also the SVB case..
Most people tend to agree that the amount of money in an economy affects economic conditions. More money makes consumers buy more goods and services, and the excess demand leads to increasing prices.. but what happens when we destroy USDs as we currently do? More SVB cases show up!
China Week: This is China’s successor in global manufacturing
In the first edition of our Demographics Watch series, we took inventory of the global problem of aging populations. The issue is a familiar one in the West, but ‘The Asian Tigers’ too are waking up to a new reality of shrinking working populations. Who is next in line to take over from China as the world’s labour hub?
5 Things We Watch: Fed rhetoric, Chinese rebound, Chinese inventories, US labor market and a record-breaking yield curve inversion
Midweek has arrived and that calls for a rundown of the five things we watch the closest. As is the custom every Wednesday, we will take you through these most important themes (and charts) in macro and summarize how we interpret them.
China Week: The reopening play vol 2
The abiding tale of a Chinese reopening has been about as labile as pundits’ conviction of a soft landing. In fact the two may very well be tightly correlated. Now, it seems data has finally arrived to firmly lay to rest the debate whether a reopening would show. What better time then to unwrap and examine the implications?
The Energy Cable #10: Is the risk/reward turning in energy space?
Risk reward may be about to turn for parts of the European energy space after a land-slide in prices in recent quarters. Will margins increase this spring again? Let’s have a look at the details, while we wait for more data in oil space.
Positioning Watch: Does positioning and fund flows unfog the ambiguity ruling markets?
In this somewhat unusual edition of the ‘Positioning Watch’ we’ll take a look at relevant and readily available data to assess whether we are leaning with or against the wind. Maybe this can provide further insight into the ambiguity which we have experienced in markets lately.
CHINA WEEK: What does new 2023 growth targets signal about Xi’s priorities
China’s top legislature, the National People’s Congress (NPC), opened its annual meeting yesterday. The main highlight was the presentation of the new work report by outgoing Premier Li Keqiang which sets the 2023 fiscal targets for the Chinese economy. Later this week, Xi Jinping is expected to further consolidate his power with several high-profile appointments including the new Premier, vice-premiers, and the new governor of the central bank.
Wage Watch: The recession without job losses – 7 charts on US employment
Some have labeled 2022 a “white collar recession” as the job market has remained stable throughout. Are there early signs of weakening in US labor markets? And what would be the consequences? We look at 7 charts here.
Inflation Watch: Is the inflation momentum back before it even disappeared? 5 Pros and 5 Cons
Some early indicators of inflation have started to show worrisome signals 4-6 months down the road, which may lead to a resurfacing of inflation trends before the first battle is even won. Is the double-top inflation narrative warranted? Let’s have a look at pros and cons.
Europe Wants To Get Paid – 5 Feuds To Look Out For
A gap has opened between European wages and prices over the past 12 months. This naturally leads to heightened expectation for collective bargaining agreements across the continent. We point you to the most important battlegrounds for 2023
The Energy Cable #9: Putting inventories into perspective
Greetings from Copenhagen everybody! It is Tuesday and that means another energy cable. Inventories are building, while jet fuel demand remains subdued compared to projections. In this update from 3Fourteen and Steno Research we take you through everything you need to know about current energy market trends and how to trade them.
Inflation Watch: 7 charts on EUR inflation after smoking hot prints from Spain and France
Service inflation is feeding through to Europe in size now, which makes the case for further ECB tightening compelling. Here are 7 charts on EUR inflation ahead of the Euro-zone print on Thursday and what it means for markets
Seasonality Watch: Four charts that will make you go hmm…
Our working hypothesis continues to center around the current inflation pick-up resembling the September report from 2022 (released in October). Here are four charts that will make you go hmm…
Spending Watch – The consumer is back
After an outright terrible end to 2022 for consumer spending, 2023 has started off on a better note. Is the consumer spending back? And what are the driving forces behind the consumption comeback in case?
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Steno Signals #41 – Deutsche, Deustche alles ist vorbei?
Deustche Bank is selling off rapidly without an evident trigger event. What is going on? Is the crisis spreading to Europe and will it turn into a credit crisis? We look at the situation here and find more and more reasons to be worried.
Fed Live Blog
When Fed Chair Powell goes on stage tonight we of course stay on the line for live coverage of the interest rate decision and the following speech. Get prepared and follow the meeting with us, as well as getting the best takeaways here on our live blog!