Business Cycles
Thursday’s US CPI release showed that the disinflation trend remains intact with the monthly print remaining soft at 0.2% m/m, slightly lower than expected. The SPY initially rallied on the downside inflation surprise but quickly reversed its gains…
According to BCA Research’s Emerging Markets Strategy service, the gap that has formed between the S&P 500 price and its operating profit margins, as well as the divergence between the S&P 500 Forward P/E ratio and the 30-year TIPS yield are…
Numerous divergences have opened up between global risk assets and global business cycle variables. These gaps are unsustainable, and odds are that the recoupling will occur to the downside with risk assets selling off.
As expected, the US CPI release shows the monthly headline and core inflation gauges were both unchanged at 0.2% m/m in July. Notably, annualized monthly core inflation fell below 2% for the second consecutive month. Similarly, the annual change in core CPI…
The rise in bond yields over the past few weeks has made some investors wonder whether US Treasurys and other government bonds really are a good hedge against recession. Could there be an environment in which the economy goes into recession but bond yields…
China’s CPI and PPI inflation release for July indicates that deflationary pressures dominate the domestic economy. After remaining unchanged in June, consumer prices fell by 0.3% y/y. Meanwhile, the 4.4% y/y drop in producer prices fell below expectations of…
During the last economic expansion, a structurally overweight allocation to stocks was at least partially warranted by the idea that “There Is No Alternative” – or “T.I.N.A.” During the last expansion, very accommodative monetary policy significantly reduced…
The global economy will not enjoy an “immaculate disinflation” but will suffer a very maculate one due to China’s growth slowdown and restrictive monetary policy in the developed world. Investors should stay overweight low-beta assets.
Chinese trade data continued to deliver a pessimistic signal about the global manufacturing cycle. The export contraction deepened to -14.5% y/y in US dollar terms in July – below expectations of a -13.2% y/y decline and the sharpest drop since early in the…
The US NFIB’s Small Business Optimism Index increased by 0.9 points to an eight-month high of 91.9, beating expectations of a more muted 0.3-point increase. Although the level remains depressed below the 49-year average of 98, the trend is positive: the July…