Welcome to another edition of Vantage Point and our look ahead to 2023.
Q4 earnings faced a low bar and largely underwhelmed, despite modestly beating expectations. The biggest takeaway is the notable downward revision to the outlook…
January US personal spending and PCE surprised significantly to the upside, sending yields higher by up to 10 basis points, the Treasury curve flatter, and equities lower.
Declining US inflation and positive growth surprises out of the euro area and China contributed to US dollar weakness at the start of 2023. However, the USD has since reversed its course.
Investors should resist assuming that value’s recent performance was a one-off fluke and that the 2020s will be a repeat performance of growth’s domination over value.
Over a longer period, the relationship between M2, its velocity and inflation has been unstable.
In the US, inflationary optics will have finally turned positive for the Fed in 1H2023, aided by favorable base effects and goods disinflation. However, the labor market remains tight, and inflationary trends in the services sector tend to correlate with wage inflation.
The Bank of Japan’s experiment with Yield Curve Control and asset purchases is set to wind down. The current framework is getting exorbitant, worsening adverse side effects...
After an annus horribilis, we expect China’s economy to experience a messy but much needed growth recovery by mid-2023 on the country’s pivot from its zero-Covid policies.
The market expects the inflation problem to be sorted out by a shallow recession and loosening monetary policy in 2023. We think otherwise…
Recent stresses in the global financial systems, albeit generally confined to its weakest links, carry an increased probability of a credit pullback later this year. This would result in lower real activity as well.
US October Consumer Price Index (CPI) was weaker than expected in both headline and core. The deceleration in core inflation should be particularly comforting for the Fed.
Describes how global policy divergence and other macro-drivers of large-scale Yen depreciation are still intact, but these are now starting to discernably raise inflation pressure in Japan.
The Taiwan related tension may not go away quickly with the upcoming quinquennial transition in China and US mid-term elections. We cover more in this note.
This note details our latest analysis of prolonged food price shocks and their impact on macro and investments.
The history of bear markets makes for gloomy reading. However, this brief note focuses on what we might expect once the -20% threshold has been crossed. How has the market (S&P 500) performed after entering a bear market?
The state of global supply chains are widely seen as heavily influenced by developments in China. While it is true that China accounts for a large (nearly 30%) share of global manufacturing and shipping, we believe that it is far from obvious that it “causes” U.S. inflation. We cover some highlights and metrics in this note.
In this third note of three, we review the arguments behind these opposing views in the previous two, in the hope to provide some clarity for investors as they attempt to navigate markets in the challenging times ahead.
In the first note in a series of three on QT we argued that QT will most likely contribute to a flattening of the yield curve. Instead, many financial market participants tend to associate Quantitative Tightening (QT) with a steepening of the yield curve.
We have written extensively on our expectations for future rate hikes and the peak in US rates. In this paper, the first in a series of three on Quantitative Tightening (QT), we summarize our thinking on QT and its implications for markets.
We believe the possibility of a recession in the US over the coming two to three years is increasing. As such, we take a strong signal from the recent (albeit brief) yield curve inversion and in this note, address how our analysis led to this conclusion.