September trade data out of China might indicate a surge of temporary goods purchases in anticipation of another bump up in tariff rates. If so, this will feed into an abnormally high inventory buildup in the United States during the autumn period that will fall off a cliff early next year whether there are higher tariffs or not.
We are looking at a confluence of negative catalysts for global equities in the near term. This time around it does not exclude US equities. As I have covered for an extended period, we eventually anticipate an inflationary public policy response earlier and more aggressively than would have occurred in prior times to any material economic contractions. This is due […]
It indicates that, if anything, the risk to changes in current market expectations is to the upside in terms of a potential rate hike by early summer 2019 rather than after the summer.
Japan’s Government Bond Yields Pressured Higher as BOJ Quietly Trims Purchases of Longer-Term Maturities
JGB’s Join the Higher Bond Yield March with a Bout of Bear Steepening Concentrated at the Long End The risk/reward prospects of owning longer-dated government bonds from current historically suppressed levels are as attractive as a bucket of dry sand after a sweaty jog. As Bloomberg notes, Japan’s bond market is enduring pressure due to recent BOJ policy adjustments. Japan […]
Public official intentions on both the left and the right suggest the conditions underpinning populist political forces will continue.
The Departure from Sound Money: Current Generation Spends More on Needs, Less on Wants Than Prior Generation (Chart) – You Bet This Will Shape Future Politics and Markets
You invest in the markets of the future not the markets of the past. It is time to start expecting a more inflationary future led by both left and right populist political leaders.
On May 8th, Assist FX expressed caution in prematurely poking the seafloor for a bottom in the paper gold market: “Gold is not yet a clear buy as one might suspect with higher inflation. This is due to the risk of sharply higher interest rates still on the table. Higher real interest rates are an enemy to gold. We see […]
Here is a look at equities that are expected to be highly sensitive to global trade negotiation developments between China and the US per a recent Goldman Sachs report via CNBC. First, some names with high revenue exposure to Greater China (mainland, Taiwan, Hong Kong): Second, some names with the least amount of direct China exposure whose revenues are resoundingly […]
US Nominal GDP Is Burning Rubber at a 7.4% Annual Clip: The Public Will Get the Inflation It Thinks It Wants
Our thesis was driven by fiscal math gravity facing government budgets and game theory analysis for how central planners would react to it.
Total return on US investment grade (IG) corporate bonds has been negative all year. Half of IG bonds are rated BBB, which is one notch above junk. Deteriorating corporate credit conditions and upside inflation surprises suggest a poor risk/reward for incremental capital allocated to US IG bonds. This chart can be found here:
The metropolitan area with the fastest appreciating real estate market in the world has a central bank operating depressionary depths-of-crisis monetary policy.
The IHS Markit Retail PMI report released today for June highlighted broadening divergence among the three largest components of the shared currency’s GDP – Germany, France, and Italy. The index ticked slightly higher to 51.8 from 51.7 the prior month due to a strong enough rebound in retail sector strength in Germany to make up for weakness in France and […]
A less ugly house on Fiat Avenue. According to the IMF via Deutsche Bank, USD is currently gaining ground as a global reserve currency as it approaches reserve levels not seen since the early 2000’s. While other sources tend to vary a bit in this calculation, USD is now at least 62% of global reserves according to most estimates. This […]
Emerging market currencies as a group are on the verge of testing lows not seen since late 2016 when the “Trump trade” was fueling expectations for a surge in multi-pronged fiscal stimulus and inflation. As it turns out, reflation expectations weren’t so far off the mark. Higher interest rates in the US are pulling capital away from emerging markets as […]
Hong Kong needs to mimic the US in raising short-term interest rates in order to maintain the currency peg with USD. This is causing strain on the Hong Kong economy as exemplified by 3m HIBOR climbing more briskly than it would independent of the peg. Some of the world’s most sky-high real estate prices are rolling over. This will accelerate […]
US from a year ago: – Export Price Index: 4.9% – Import Price Index: 4.3% – Shelter: 3.5% – Fuel oil: 25.3% – Transportation Services: 3.8% – Case Shiller Home Price Index: 6.8% – Retail Sales: 6% – Real Average Hourly Earnings: 0% (would be negative with a “less adjusted” index) Fed’s “preferred” PCE Index: still below 2%. Thank goodness […]