The Watch Series
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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.
Macro Regime Indicator: Time to embrace a new economic dawn?
With beyond robust US economic growth, the interplay of growth, inflation, and liquidity takes center stage. How will this persuasive expansion shape the inflation trajectory and inform structural asset allocation strategies?
SLOOS Survey: The US economy is re-accelerating and money growth is back!
Is inflation going to re-accelerate? The bottom is in for the SLOOS survey, which tends to be a strong cyclical indicator in the US economy.
Positioning Watch – Spread-trading the way through the current environment
Rate cuts have been pushed a bit back by central bankers as economic data keeps surprising, but price action doesn’t truly reflect the dynamics we’ve been used to through 2022 and 2023. How should you play the current environment?
Trade Alert: Playing Steep vs Safe
We have taken on a new FX position and have pinned another to the watchlist. See details below
Energy Cable: Crude oil above 80.. it was fun while it lasted
Crude oil above USD 80 lasted all but a week and we are now trading in the January range again. Here is our take along with some oil-related news from the week. The structural oil bet is still improving beneath the hood.
Portfolio Watch: Riding a Rollercoaster
Manic price action across the board this week and everything looks up in the air. We are still alive and kicking despite the volatility
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Steno Signals
5 Things We Watch – SOFR Probabilities, USDJPY, CNY Devaluation, IFO & Eurozone electricity
Equities are back to winning ways, while USD rates traders agree on 0 cuts this year being a probable scenario. Meanwhile, China is likely preparing for a devaluation of the CNY, and the intervention risks in JPY pairs increases, and the next macro battle in 2024 will likely be found in EM.
The week at a glance: Time for the BoJ to step up, while soft PCE numbers may fool some..
Focus on European PMIs, the Bank of Japan meeting and PCE numbers this week! Our short and sweet take is found here!
Steno Signals #96 – A major devaluation of the CNY could be imminent
China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources. Could it be that they are preparing a major one-off devaluation of the CNY?
