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Something for your Espresso: Why the U.S. Over Germany is the Trade to Watch

While markets try to digest the effect of the inflation prints and the Republican Sweep - we stick to our trade: long U.S. over Germany equity trade amidst Germany's political and China-exposure headwinds looks like a no-brainer.
2024-11-14

Morning from Copenhagen. The Trump trade is still roaring and the US PPI today may fuel that case further with the US outperforming peers on a relative basis. Trump allegedly picking Lighthizer for the role as Trade Representative has further added to this narrative.

US CPI Review: Softish print below the surface, but 2% is faaaaaaaar away
U.S. CPI lands right in line with consensus – a softish report if you dig deeper. Used cars popped as the predictable outlier, while transportation services cooled off from last month’s highs. Shelter? Still running a bit hot above that 2% target. For the hawks, this one’s a snooze: nothing here to feed their whispers. The risk/reward was tilted dovish, and it delivered. Supercore inflation (core services less housing) ticked down to 0.3% from 0.4%, hitting its lowest level since July. We see a 25bps cut as our base case for the next Fed meeting in December.   

Chart 1.a: Slightly Softer CPI print

While markets try to digest the effect of the inflation prints and the Republican Sweep – we stick to our trade: long U.S. over Germany equity trade amidst Germany’s political and China-exposure headwinds looks like a no-brainer.

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