The price action on Friday started to resemble the lockdown-driven liquidity event of March 2020. Here’s your guide to assessing whether we’ve entered a similar liquidity event in the week ahead — a must-read.
Steno Signals #126 – Where did all the liquidity go?
The liquidity situation remains tight, and this cycle continues to defy the norm. Will activity and inflation return before Powell and his peers truly get the chance to inject liquidity again?
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Steno Signals #118 – The labour market is NOT growing. The Fed will cut MORE
The Fed will get plenty of opportunities to frontload cuts further this year as the labor market remains weak. Is this all driven by the election season? And why is the labor market so out of sync with the markets?
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EM Watch: 5 Charts on the Nosediving Chinese Indicators!
The Chinese momentum has come to a sudden halt, and we think it is related to the front-loading of imports due to tariff fears. Could China become the victim of a wait-and-see approach until after New Years?
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Portfolio Watch: Cracks are appearing in the lagging cycle
Retail sales have once again alleviated immediate recession fears, but signs of cracks are appearing in sectors that typically lag the business cycle, including construction. Consumers remain concerned about the economic situation. Bonds are holding steady for now.
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Portfolio Watch – What can we trade in this weak labor environment?
Recession chitters are certainly running the headlines after yesterday’s NFP report, which was not at all what markets were hoping for a few weeks back. September pricing is now showing 70% probability of a 50 bps cut, and people are starting to pile into recession bets. Our allocation thoughts here.
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Steno Signals #110: Run for the hills? Not so fast..
Equities are showing some signs of exhaustion, and it seems like there is still impending recession fear hidden beneath the surface. Is it time to run for the hills, or time to rethink?
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Portfolio Watch: Here comes the metals meltdown..
It’s been a muddy July, not only weather-wise, but also in markets. The signs of an equity rotation, the turning tide in USDJPY, the metals volatility & softer rates probably align. Maybe the stars are finally gearing up for a risk-friendly 4-6 weeks upcoming?
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Steno Signals #105 – What to make of the rising bankruptcies?
Recession chasing has become an obsession for many, but how can we use the current bankruptcy trend to trade the macro cycle in a clever way? Here are the findings from our bankruptcy studies.
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Steno Signals #98 – The recession panic is back right as liquidity is returning!
The recession narrative has returned after a series of weak PMIs. Betting against the returning recession hysteria has been a profitable strategy since April-2020, but will it be so again this time? Hallelujah!
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Steno Signals #91 – No more recessions ever!?
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?
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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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