We track the probability of rising growth, inflation, and liquidity momentum in real-time on a daily basis, and the developments since the start of July have been notably weak. This is the kind of setup needed to prompt central banks to restart their actions.
Liquidity is stabilizing, and there are already signs that August will be better than July. We are aware of the risks in the labor markets, but we see strong signs of a cyclical bottom here, which may soften the impact of the uptick in unemployment.
Here are the main take-aways from the most important survey in the US economy.
Just as we identified in last month’s regime – and as our asset allocation model predicted -, risk assets have indeed performed. Question is if they will continue to. As always, we present our model framework on how to structure your portfolio.
The 2024 consensus is getting very bullish on US growth, while nothing is happening outside of US shores. Meanwhile, markets see all major markets converging towards a 2-2.5% inflation range. Feasible?
Limited upside in the ISM Manufacturing index as we await a dovish EUR-flation number coming in on Friday. There are plenty of things to look at in the global macro landscape this week.
We round off 2023 with some what-ifs that could wrongfoot consensus in 2024. And maybe they are not as unlikely as current market pricing indicates.
Just as most tabloid models forecasted a near-0% chance of a recession within the next year, markets reacted in stark contrast. Can the recent broad based selloff and the following and current rally be explained by developments in liquidity, inflation, or growth?
We have entered a macro regime where PMIs and headline inflation outpace liquidity in importance. The pick-up in Manufacturing PMIs paired with the potential higher headline inflation provides some interesting guidance for portfolio managers.
Watch ISM Manufacturing and European inflation this week. Another test of the January/February narrative of higher activity and higher prices.
