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Macro Monitor

Oct 05 2024

China’s “Whatever It Takes” Moment—“Believe Me, It Will Be Enough”

  • Oct 5, 2024

Market reaction to the latest flood of monetary and fiscal stimuli has been spectacular. While conviction about Beijing’s attempts to revive its flagging economy has been severely lacking, this time we should believe it. It’s certainly the right medicine China needs and the spark of confidence these actions will ignite should not be underestimated.

Oct 05 2024

U.S. Election Study Update

  • Oct 5, 2024

Our assessment shows that “who” wins the White House does not seem to matter that much to most major asset classes. Nevertheless, we believe a strong dose of caution against political and/or geopolitical risk is prudent.

Oct 05 2024

Risk Aversion Index: Maintaining Its “Higher-Risk” Signal

  • Oct 5, 2024

Our Risk Aversion Index edged lower but stayed on the “Higher-Risk” signal.

Sep 09 2024

Anatomy Of An Easing Cycle

  • Sep 9, 2024

The economy normally fades heading into a series of rate cuts, with higher unemployment and lessening CPI inflation. Risky assets (stocks and credit) do well, and bond yields move lower. Real assets also benefit (gold in particular). On the whole, an easing cycle is favorable for most assets.

Sep 09 2024

Risk Aversion Index: Maintaining Its “Higher-Risk” Signal

  • Sep 9, 2024

Election and geopolitical risks are far from being adequately priced in, while the current market pricing of Fed rate cuts is too aggressive.

Aug 06 2024

Three Themes To Watch: Recession, Inflation, The Election

  • Aug 6, 2024

Is the market overreacting to recent economic data? Concerns about a growth slowdown are replacing the optimistic outlook of early 2024. Our Recession Dashboard shows increased risks, with notable declines in housing, employment, and consumer confidence. Despite this, equity and credit markets remain resilient. As we navigate these uncertain times, discover how upcoming elections and potential economic policies could shape the future.

Jul 08 2024

The Current State Of Value—An Update

  • Jul 8, 2024

Value’s migration behavior was the key to its failure between 2010-2020—its pattern got progressively worse, culminating in a Value trap during 2017-2020. We believe macro tailwinds and positive surprises are both needed, and, while the setup on the macro front, post-2020, has become quite favorable, in order to breathe more life into Value we need to see the upswing in earnings surprises continue.

Jul 08 2024

Risk Aversion Index: A New “Higher-Risk” Signal

  • Jul 8, 2024

The first U.S. presidential debate brought the election risk front and center.

Jun 07 2024

Golden Intrigues

  • Jun 7, 2024

Chinese investors have flocked to gold as traditional investments have massively disappointed. Global central banks are also buying gold amid heightened geopolitical tension. Both trends help explain why gold has defied the gravitational pull of a stronger dollar and higher real yields.

Jun 07 2024

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Jun 7, 2024

Economic numbers will likely continue to cool a bit, but more election-year policy measures will be forthcoming in the next few months, cushioning the downside for the economy.

May 07 2024

$Yen No Mountain High Enough?

  • May 7, 2024

One casualty of the U.S. market’s hawkish turn is the Japanese Yen. It certainly grabbed its share of headlines, yet, when viewing the selloff in historical perspective, this year’s uptick looks entirely inconsequential. Additionally, when considering the Yen through the lens of other Asian currencies, its outsized weakness versus the dollar essentially disappears. Dollar strength is the real driver and it has pummeled Asian currencies across the board.

May 07 2024

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • May 7, 2024

The repricing of Fed cuts has largely run its course, removing one big negative from the market.

Apr 04 2024

First BoJ Rate Hike In 17 Years—Not So Virtuous After All

  • Apr 4, 2024

To gauge how much faith we should have in this “virtuous” cycle, we examine the macro context in terms of the business cycle, the Yen, interest rates, and inflation. Ultimately, inflation holds the key to bond yields, as the main difference between pre- and post-1990 rate hikes boils down to inflation—which is also the key determinant of how far the BoJ can go in this tightening cycle.

Apr 04 2024

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Apr 4, 2024

The U.S. economy is likely to benefit from all the election-year policy measures yet to come.

Mar 07 2024

Bank Lending & Wealth Effect Support U.S. Economic Resilience

  • Mar 7, 2024

Improvement in bank lending trends should be a tailwind for economic activity, while steeper yield curves also imply a looser lending environment lies ahead. Another area supporting U.S. economic resilience is the wealth effect: The surging wealth effect is boosting consumer confidence which, in turn, leads to higher consumption.

Mar 07 2024

Risk Aversion Index: Stayed On “Lower-Risk” Signal

  • Mar 7, 2024

Our Risk Aversion Index edged down again in February and stayed on the “Lower-Risk” signal generated at the end of January.

Feb 07 2024

Three Key Themes To Watch—Recession, Inflation & The Dollar

  • Feb 7, 2024

The probability of a soft landing has materially increased, while stronger than expected growth is likely to put a floor on inflation, which challenges the consensus disinflation view. A refresh of our Dollar Monitor suggests a weaker dollar going forward.

Feb 07 2024

Risk Aversion Index: A New “Lower-Risk” Signal

  • Feb 7, 2024

Positive economic momentum is apt to carry on for a while longer. Within fixed income, we are turning favorable toward credit, especially high quality investment-grade corporate bonds.

Jan 06 2024

2023—A Year Of Round Trips

  • Jan 6, 2024

The S&P 500 index painted a picture of a runaway market in 2023, but for a lot of non-equity markets, 2023 was a year of round trips.

Jan 06 2024

2024 Time Cycles—Watch Politics & Geopolitics

  • Jan 6, 2024

Given how many potential political and geopolitical hotspots there are at present, it might be a bit presumptuous to think 2024 will be a typical year. Politics and geopolitics are the most underpriced risk for 2024.