In today’s briefing:
- EM by EM – Copper Comeback?
- Out of the Box #1: The Growing US Deficit and Why It Is Likely Going to Lead to Lower Interest Rates
- Weekly Market Monitor (17) – Banking Anxiety – Back with a Vengeance!
- ECB Still on Track For 25bp Hike in May
- CX Daily: Scandal-Ridden Chinese Soccer Gets in Foul Trouble Again
- TPW Advisory Friday Musings: Turn Signals
EM by EM – Copper Comeback?
- Copper inventory is on the floor and Production is lower than usual
- China’s rebound is not your ordinary one and services seem to drive the economy
- Pricing and probability slowly turning and suspect this may be a trend to follow
Out of the Box #1: The Growing US Deficit and Why It Is Likely Going to Lead to Lower Interest Rates
- If we run a model of the unemployment rate and the ISM composite growth gauge against the Federal Budget deficit/surplus, we get a gap of almost 7% of GDP
- Individual tax refunds issued through March 2023 were 3% greater than the same period in 2022
- A debt ceiling deal hence risks being the trigger for less bank liquidity, further deposit flights and USD liquidity
Weekly Market Monitor (17) – Banking Anxiety – Back with a Vengeance!
- The measures taken by the Federal Reserve and the US Treasury do not protect against idiosyncratic bank runs like the one that hit First Republic Bank.
- Big Tech is beating big time, but earnings and sales growth have declined significantly in recent quarters, while valuation increased.
- Should volatility spike, which is definitely on the table, Systematic Macro investors will have to sell up to USD 300 billion in equities.
ECB Still on Track For 25bp Hike in May
- Q1 EA GDP growth disappointed recently raised expectations, matching the ECB’s March forecast for 0.1% q-o-q. And the ESI and EEI were stable in April rather than rising.
- Persistent excess demand continues to support excess inflation, but firms are trimming their expectations from the highs in surveys, which is at least on the right path.
- National flash releases for April suggest upside risks haven’t crystalised again, so the ECB has space to resist raising by 50bp in May. We expect three 25bp rate hikes.
CX Daily: Scandal-Ridden Chinese Soccer Gets in Foul Trouble Again
Soccer / In Depth: Scandal-ridden Chinese soccer gets in foul trouble again
Law / China grants authorities more powers to fight spies
Covid-19 / Major Covid outbreak ‘unlikely’ in near term, expert says
TPW Advisory Friday Musings: Turn Signals
- As regular readers know we have been driving down the investment highway following our “Middle Path” directions for roughly a year.
- The Middle Path calls for a high nominal growth world that drives between high inflation and deep recession – the two main economic fears of the past year or more.
- More recently we have highlighted the huge positive policy changes occurring throughout our Tri Polar World, policy changes that are being obscured by a Curtain of Fear, Uncertainty & Doubt – the famous FUD.
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