Amareos

Ryan Shea

Thematic (Sector/Industry)

<h2>Introduction</h2>One of the numerous criticisms directed towards President Trump is that he tends to view everything as a zero-sum game. Almost certainly informed by his years as a corporate deal-maker, every gain made comes at someone else’s expense. Such thinking seems to be behind the administration’s recent greenlighting of tariffs on US steel and aluminium imports. The recently issued reports1 by Commerce Secretary Ross cited “national security concerns” for supporting the imposition of tariffs.…

IntroductionOne of the numerous criticisms directed towards President Trump is that he tends to view everything as a zero-sum game. Almost certainly informed by his years as a corporate deal-maker, every gain made comes at someone else’s expense. Such thinking seems to be behind the administration’s recent greenlighting of tariffs on US steel and aluminium imports. The recently issued reports1 by Commerce Secretary Ross cited “national security concerns” for supporting the imposition of tariffs.…

The Market Sentimentalist - Zero-Sum (Thoughts on G3 Currencies)

Economist

Richard Iley

Macroeconomics

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/045/238/original/Screen%20Shot%202018-02-22%20at%2011.10.17%20AM.png?1519260089" class="editor-image img-responsive" data-smartkarma-image-id="45238"></figure><div class="content-highlight">
The answer to this critical question for global investors is increasingly, yes! We already know that US final domestic demand boomed at an extraordinary rate in the final three months of 2017; up nearly 5% SAAR in real terms and almost 8% SAAR in nominal terms. Only a near record surge in imports (which can be thought of as suppressed inflation) capped GDP growth around 3% (see <a href="https://www.smartkarma.com/insights/chart-of-the-day-what-lies-beneath" target="_blank" data-smartkarma-citation="insights:17175">Chart of the Day: What Lies Beneath</a>). 
And rather than tapering off, domestic demand seems to have gathered even further…
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The answer to this critical question for global investors is increasingly, yes! We already know that US final domestic demand boomed at an extraordinary rate in the final three months of 2017; up nearly 5% SAAR in real terms and almost 8% SAAR in nominal terms. Only a near record surge in imports (which can be thought of as suppressed inflation) capped GDP growth around 3% (see Chart of the Day: What Lies Beneath). 
And rather than tapering off, domestic demand seems to have gathered even further…


Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

FX & Rates

The brevity of the recent correction to US equities suggests that US monetary conditions remain supportive for risk-taking.Foreign holdings of US Treasury securities remain significant, although official holdings have fallen in importance since 2011.Foreign influence in US equities is far lower compared to Treasury securities, but overseas buyers have grown significantly in importance for US corporate bonds.Changing policy expectations for overseas central banks have been major reasons for the dollar’s weakness during the past year, contrary to prevailing wisdom.US bond investors remain sceptical that the Fed will be able to raise the federal funds rate in line with forward guidance, while expectations about ECB policy have become significantly more hawkish, despite President Draghi’s dovish rhetoric.The Trump Administration is winning the Great Currency War due to its ability to wield a protectionist stick, as well as its willingness to take bond market risks with easier fiscal policy.

The brevity of the recent correction to US equities suggests that US monetary conditions remain supportive for risk-taking.Foreign holdings of US Treasury securities remain significant, although official holdings have fallen in importance since 2011.Foreign influence in US equities is far lower compared to Treasury securities, but overseas buyers have grown significantly in importance for US corporate bonds.Changing policy expectations for overseas central banks have been major reasons for the dollar’s weakness during the past year, contrary to prevailing wisdom.US bond investors remain sceptical that the Fed will be able to raise the federal funds rate in line with forward guidance, while expectations about ECB policy have become significantly more hawkish, despite President Draghi’s dovish rhetoric.The Trump Administration is winning the Great Currency War due to its ability to wield a protectionist stick, as well as its willingness to take bond market risks with easier fiscal policy.

Dollar Weakness: Blame Shifting Monetary Policy Expectations & Protectionist Trump Administration

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Just as last week's January CPI report showed a genuinely alarming acceleration in 'core core' CPI momentum with the Cleveland Fed's median CPI gauge accelerating to a rate not seen since 2006 (see <a href="https://www.smartkarma.com/insights/chart-of-the-day-us-inflation-turns-scary" target="_blank" data-smartkarma-citation="insights:17743">Chart of the Day: US Inflation Turns Scary</a>), there are now also clear signs of a dramatic ramping up of inflationary pressure further upstream in the booming manufacturing sector. 
Lead indicators of manufacturing pipeline price pressures are relatively thin on the ground. The bellwether ISM…
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Just as last week's January CPI report showed a genuinely alarming acceleration in 'core core' CPI momentum with the Cleveland Fed's median CPI gauge accelerating to a rate not seen since 2006 (see Chart of the Day: US Inflation Turns Scary), there are now also clear signs of a dramatic ramping up of inflationary pressure further upstream in the booming manufacturing sector. 
Lead indicators of manufacturing pipeline price pressures are relatively thin on the ground. The bellwether ISM…


Chart of the Day: US Inflation Turns Scary - Part 2

Multi-asset Macro/Emerging Markets Strategist

Virgil Fernandez Esguerra

Our guide to this week’s global macro risk events and trading opportunities.<ul class="">
<li>
This week in trade ideas: Buy VIX on dips below 14. We review the merits of Ray Dalio's 'Big Short' on European stocks and add long EUR-SEK and short ZAR-MXN to our watchlist. We stay defensive on USD, US Treasurys and US equities via long positions in JPY, EUR, UST 10s vs 30s and US banks vs FANG+ stocks. We are long AUD-NZD and SGD-CNH and prefer Malaysia to Indian and Philippine equities.</li>
<li>
Monday: Japan trade, Thailand…</li>
</ul>

Our guide to this week’s global macro risk events and trading opportunities.

This week in trade ideas: Buy VIX on dips below 14. We review the merits of Ray Dalio's 'Big Short' on European stocks and add long EUR-SEK and short ZAR-MXN to our watchlist. We stay defensive on USD, US Treasurys and US equities via long positions in JPY, EUR, UST 10s vs 30s and US banks vs FANG+ stocks. We are long AUD-NZD and SGD-CNH and prefer Malaysia to Indian and Philippine equities.

Monday: Japan trade, Thailand…


Week Ahead in Global Macro: FOMC/ECB Minutes, Dalio's 'Big Short', Japan CPI, South Africa Budget

United States

The US dollar is the official currency of the United States of America.

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The Market Sentimentalist - Zero-Sum (Thoughts on G3 Currencies)

IntroductionOne of the numerous criticisms directed towards President Trump is that he tends to view everything as a zero-sum game. Almost...

Amareos

Chart of the Day: Is the US Overheating?

The answer to this critical question for global investors is increasingly, yes! We already know that US final domestic demand boomed at an...

Richard Iley

Dollar Weakness: Blame Shifting Monetary Policy Expectations & Protectionist Trump Administration

The brevity of the recent correction to US equities suggests that US monetary conditions remain supportive for risk-taking.Foreign holdings of US...

DeSaque Macro Research

Chart of the Day: US Inflation Turns Scary - Part 2

Just as last week's January CPI report showed a genuinely alarming acceleration in 'core core' CPI momentum with the Cleveland Fed's median CPI...

Richard Iley

Week Ahead in Global Macro: FOMC/ECB Minutes, Dalio's 'Big Short', Japan CPI, South Africa Budget

Our guide to this week’s global macro risk events and trading opportunities. This week in trade ideas: Buy VIX on dips below 14. We review the...

Virgil Fernandez Esguerra

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52-week Range

Market Cap (USDm)

P/E

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