China has decided it is time to pull away the punch bowl for a little while.
VIX and other “fear index” measures of market volatility are in secular decline.
Out-sized market attention has been placed on the French general election this weekend on Sunday, April 23.
Gold raged $50 per troy oz. higher after the last note posted on this site 27 March.
I currently view long gold and miners as perhaps the strongest near term trade(s) if you believe the “Trump trade” is unwinding for the time being.
Although combined production cuts resulting from the OPEC deal are said to be greater than combined production increases from the US and others, meaning inventories should be into balance, global inventories keep rising–particularly in the US.
Dovish hike of 25bp
Energy trader positioning has been heavily long oil and that trade seems to be unwinding.
Real interest rates are deeply negative in much of the Eurozone due to the combination of interest rate repression by the ECB’s bond buying program plus above-target inflation.
Something has to give, and it will be reflected in an even weaker GBP.
Macro Theme: Higher Oil on OPEC/non-OPEC Production Cut Implementation Exceeding Expectations with Historic Cooperation
The most important inflation chart to focus on right now is producer prices in China.It provides a depiction what is happening with prices at the early stage of production in the largest exporter nation.
The politics of trade protectionism, nationalism, and anti-immigration are the match which will ignite dormant inflationary gasses bubbling underneath the surface after years of short-sighted monetary policy experiments.
It’s all fun and games until everyone tries to sell their government bonds at the same time. Markets have only begun seriously thinking about what the impacts of a more nationalistic, populist, reflationary economic climate might look like should the same political forces which caused the UK to vote itself out of the European Union and Donald Trump to become […]
“Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” Trump told The Journal, referring to competition from China. The Trump Administration wants to make America great again by transforming it into a manufacturing powerhouse like it was in the Post War glory days. Buy America, hire America. That’s not so bad really. Most Americans are generally on board with this patriotic slogan as long as its implications stop there. But then Mr. Trump takes things a step further with nonsense about the “strong dollar killing us.” By “us,” he means the 13% of the US economy reliant upon goods exports (as opposed to the other 87% more reliant upon domestic services and consumption). Mr. Trump surely isn’t referring to the more […]
The Eurozone Consumer Price Index registered an increase of 1.8% year-over-year in January versus December’s reading of 1.1%. This means the ECB’s inflation target mandate of “close but below 2%” has effectively been satisfied at least a year earlier than intended. Next comes a series of goal post moving exercises. Policy makers and central bankers in Europe desire continued stimulus pumping to help limp past the banking crisis in Italy, the ongoing debt crisis in Greece, and significant political risk posed by elections in France, Germany, and the Netherlands. Expect central planners in Europe to disregard the steepening inflation trend for as long as possible. Public discourse will gravitate toward new arguments downplaying headline CPI. These will include shifting focus to core CPI, blaming […]