by David Hill | Oct 26, 2018 | US Economy, US Equities
We have previously discussed that we see the end of the dollar’s rally coming into view, and that further reasonably-sized rallies (~2-3%) over the next 1-3 months should be used to take profits on long dollar positions. The DXY has rallied over 7% this year, and a...
by David Hill | Sep 16, 2018 | US Economy
The 2s10s yield curve continues to grind incrementally lower, but negative carry is becoming a formidable headwind. One year carry on this part of the curve is a punitive 28bps. We are also seeing the forward yield curve struggling to flatten any more (top-left...
by David Hill | Aug 9, 2018 | China, Global Economy
With China taking the brunt of the escalating trade war, we have identified several economies that could benefit from China’s loss (assuming that President Trump continues to focus on China and does not pursue blanket tariffs on all exporting nations). To gauge this,...
by David Hill | May 17, 2018 | US Economy
Recent data from the labour market and the National Federation of Independent Business shows that wages will be picking up quickly this year. The NFIB compensation plans is now at the highest point in the last twenty years. Small businesses expect to raise wages, and...
by David Hill | Apr 6, 2018 | US Economy
The US manufacturing ISM is currently at levels last seen before the 2008-09 recession. While this reflects the recent optimism about growth prospects in the US, we see several headwinds to the industrial sector. The top-left chart shows the ISM against the VP...
by David Hill | Mar 12, 2018 | Leading Indicators, Uncategorized, US Economy
A key risk for investors remains an US inflation overshoot. US inflation breakevens have been rising since the start the year (top-left chart), however we believe this is more a reflection of market pricing returning to fair value than the start of a self-perpetuating...
by Simon White | Jul 21, 2017 | US Economy
Although coincident growth data is holding up for now, there are a number of macro “red flags” at present, in particular flattening yield curves (despite the recent bounce, US 2s10s is still 34bps flatter YTD) and falling excess-liquidity conditions. Yield curves are...
by Bill | Mar 24, 2017 | US Equities
(from our Weekly of 21st February) As we have been noting, the market remains in a risk-on regime, with positive momentum, falling volatility and confirmation from various inter-market relationships such as cyclical stocks outperforming high dividend stocks, high...
by Bill | Sep 9, 2016 | US Economy
A discussion of late has been whether the Fed should raise its inflation target. We think this would be a bad idea. Currently, with a 2% target, the Taylor rule implies the Fed Funds rate should be closer to 2%. With a 3% inflation target, the Taylor rule would...
