Recession chasing is getting increasingly weak as an investment strategy with fewer and fewer recessions around. Is the business cycle still alive and is it big enough to matter for markets?
Something for your Espresso: Wen recession?
The US economy is accelerating, and various indicators have clearly bottomed out already. The question is if prices will accelerate alongside the rebound in activity and whether the rates market is still wrong.
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Steno Signals #85 – NFP report full of FAKE news?
An extraordinary NFP report spooked markets on Friday, but is the report full of fake news? The NFP admittedly rhymes with the big picture observations. The US economy is accelerating, while Europe is stuck in the abyss.
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5 things we watch: US recession, US inflation, Euro Inflation, PCE vs CPI, STIR pricing
This week’s 5 things we watch with hot topics. This week we’ll cover US recession talks and financial conditions. We’ll also hone in on both US and European inflation and finally talk rates expectations.
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Credit Watch: Nothing in the credit impulse speaks in favour of a 2024 comeback
We still struggle with the improving economic consensus for 2024 as we consider it to be out of whack with the credit impulse. Can the economy grow without credit or is the 2024 hope-timism a false flag?
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Central Bank Review: Powell, a genius or a madman? 2024 looks like a year of fat tails
Powell and the Fed aim for the soft landing despite all the Volcker-nonsense of 2022/2023. Will inflation ever drop to 2% if the animal spirits are unleashed again? Tails look fat for 2024.
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Bull Steepening Watch – Is lower yields really what risk assets want?
Nothing comes for free, and a bull steepening of the yield curve is typically not great for risk assets. Will this time be different? Markets better hope so.
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Steno Signals #75 – The 2007/2008 playbook is useful again
The “soft landing” narrative has gained material momentum in the mainstream coverage ahead of 2024, which is a clear risk to the outlook. It always looks like a soft landing until the nosedive.
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Steno Signals #74 – Did King USD just break?
Sudden sharp moves against the USD after Powell let go of the monetary steering wheel. Will the Fed take back control or has the USD already peaked? This is the key question in global macro before New Years.
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Out of the Box #23: Why the Treasury undershoots actual issuance needs
The US fiscal trajectory is unsustainable and will require resolution, but does it inevitably entail excessively high-interest rates for “longer”? We have our doubts.
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Steno Signals #72 – When a recession meets a melt-up in equities and bonds
The Fed introduced a new feedback loop, which is likely to limit the scope of this bear market rally. Remember that Q4 data usually looks really bad in an inflationary environment, while Q1 is the quarter of “inflation math”.
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Steno Signals #71 – A first taste of the recession sell-off?
The developments in the Middle East have refueled the recession fears and markets are getting concerned due to the spike in term premiums. Is this a first taste of the recession sell-off coming? Here is how we deal with it.
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Ifo Watch: Signs of disinflation bottoming out in Germany?
Inflation is likely going to drop just below 2% in Europe/Germany, but there are signs of bottoming price pressures in the IFO Survey, while the Chemicals sector keeps improving orders/inventory ratios.
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Steno Signals #69 – The recession playbook
Recession models are mostly based on manufacturing, which currently rebounds leading to the conclusion that the recession risk recedes? But are actual recession risks rather on the rise?
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Recession Playbook: Here is how we think the recession will pan out
There has been a load of discussions on the timing of the recession, but just as the consensus narrative is shifting towards a soft landing scenario, the recession risk is probably actually on the rise. Here is why.
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Recession Nugget: 4 Charts for the Equity Bears, 1 Chart for the Bulls!
We have looked at historical macro data to assess how assets perform around and in a recession, and if we are actually heading towards one.
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Something for your Espresso: More fuel (for recessionistas)
The EIA report shocked oil and gasoline markets and the big question is whether the weak demand is a harbinger for the broader US economy.
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Macro Nugget: The Eurozone horserace
The Eurozone bear case seems to finally be playing out but what is the current state in Europe? Bleak and divided are two words that spring to mind.
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CRE Debt Watch: The initiator or magnifier of financial crises
Have markets and REITs come to terms with higher interest rates, and should we really care? We’ve looked to see if a collapse was brewing – in the US or in Europe.
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Something for your Espresso: Bye bye Oprahnomics?
The IRA has saved the US from entering a recession alongside peers this year. If the appropriations negotiations this week lead to a bye bye to Oprahnomics, then we consider a recession a done deal for 2024. Buckle up!
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US Economy Watch: The Recession That Never Came… Or?
Inflation in the word recession? Some have stubbornly called for a doomslike recession while others see the economy firing on all cylinders. Our data-based weigh in on the topic.
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Something for your Espresso: Everything you better watch while ISM Manufacturing rebounds
There are admittedly early signs that the Manufacturing sector rebounds in the US with the Dallas Fed PMI confirming the stabilization narrative. We tend to agree on the direction of travel in Manufacturing, but here is everything you need to watch outside of that sector.
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Steno Signals #62 – The recession is called off (by consensus)
The “no-landing” camp is getting increasingly crowded and even if we do not rule such a scenario out, we find that the probability of outcomes is starting to favor a more conservative approach to risk taking.
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Steno Signals #57 – What on earth is going on with the USD?
The USD has weakened materially over the past weeks, which could be an early harbinger of an improving growth cycle. If cyclical growth is indeed rebounding, right about everyone will be wrongfooted. Here is how we position for it..
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Steno Signals #56 – The business cycle that everyone misunderstood! Here is why..
Positioning and price patterns reveal that the pain trade is higher rates- and higher equities, while the recession is slowly but surely being called off by the consensus. Here are four reasons why everyone misunderstood the recession risk and why it is still alive…
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Credit Watch – What’s going on with credit spreads?
While we have been vocal about an upcoming credit crunch, credit spreads are not moving whatsoever. Are the markets wrong, and what’s keeping credit spreads low?
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Steno Signals #50 – Singing Hallelujah while sleeping at the wheel!
AI is mana sent from heaven, while McCarthy and Biden have allegedly agreed on a debt ceiling deal. We continue to favor positions with a positive beta to slowing inflation despite the recent concerns around stickier for longer.
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Positioning Watch: Is the bond market plain wrong?
While commodities traders have positioned themselves for the inevitable recession, some equities and FX are living their own lives, celebrating the recent debt ceiling optimism and better than expected GDP numbers. Find out if you have chosen the correct bets in this week’s edition.
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Something for your Espresso: Germany is in a recession
IFO seems to have peaked, and Germany likely already is in some sort of recession. Will the ECB care? And will EUR + DAX bulls care? FOMC Minutes reveal increasing divergence of views within the board.
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US Equity Watch: A rotations game
Areas of the economy are showing increasingly worrying tendencies, and some are outright caving in. Ahead of today’s FOMC meeting, we decided to take a closer look at the state of US equities and whether the defensive rotation was due – or if one were better off leaving the table entirely…
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