Inflation/Deflation
We recently pointed to the UK Budget announcement as a pivotal event for UK assets. Following an initially positive reception, the market has turned and priced in further fiscal premia in UK assets, with both gilts and the pound selling off. While the…
The Fed’s preferred measure of inflation, core PCE, met expectations of a reacceleration to 0.3% month-on-month, and reached 2.7% year-over-year. The rest of the Personal Income and Outlays report showed solid consumption growth, although supported by a…
The global political system is destabilizing and the US will turn more hawkish in foreign policy, trade policy, or both, regardless of the election outcome. Tactically go long the dollar.
While moving in the right direction, China’s latest stimulus measures are falling short of the mark to reflate the economy. The latest rumors extend this trend. News agencies reported discussions of a CNY 10 trillion bond issuance over three years. Six…
Our US Political Strategy colleagues now see 55% odds of a Trump victory, with odds of a Republican sweep at 47%. As odds of a contested election are rising, they built on their 2020 work to provide answers for next week’s election: Won’t the economy…
The main driver of global consumer sentiment in the past few years has been high inflation. Nowhere has this been the case more than in the US, where measures of animal spirits were depressed despite a roaring economy. Today, inflation worries have eased, but…
The “core core” (ex. fresh food & energy) segment of the Tokyo CPI basket beat expectations in October, printing at 1.8% year-over-year and accelerating from 1.6% in September after troughing at 1.5% in July. The Tokyo CPI is a timely indicator of…
Savings must either flow into domestic investment, or abroad. Saving too much, with nowhere to funnel it, is breaking China’s economic model according to our Global Investment Strategy colleagues. As China's share of global manufacturing climbed to 30%,…
Trump may be slightly favored for the White House but the US election is still extremely close. Odds of a contested or contingent election are rising, which should cause stock market volatility. A Republican sweep should cause more volatility. Democratic gridlock is next most likely but benign for stocks in the short run.
Our Counterpoint Strategy team believes the equity bull market’s biggest risk is the reversal of the divergence between Japanese and US real yields. Japan’s real policy interest rate differential versus the US stands at an unprecedented and unsustainable…