In today’s briefing:
- Out of the Box #18: Time for the Second Inflation Wave? AAAAAAH!
- EM by EM #20 Another energy squeeze in the cards?
- Services Nugget: How Do the Central Banks React?
- The Weekly Market Monitor – Valuation Woes and Currency Moves
Out of the Box #18: Time for the Second Inflation Wave? AAAAAAH!
- In our Out of the Box series we aim at addressing emerging topics before they turn into consensus narratives to be ahead of the curve in price action.
- The below chart made the rounds lately as energy prices have started increasing again due to the tight supply side caused by the Saudi Arabians and Russians.
- We admit that the study comparing the 1970s to today is mostly esoteric, but we have ourselves pondered whether inflation dynamics could return in a second wave.
EM by EM #20 Another energy squeeze in the cards?
- In our analysis last week, we delved into the situation in Turkey and arrived at the following conclusion: The capable technocratic approach is more likely to succeed than the resurgence of economic populism.
- However, what currently deters us from fully engaging in this trade is the potential for inflationary pressures to escalate due to the harsh impact of energy price fluctuations, which can be particularly unforgiving for net-importing economies like Turkey.
- That seems to have aged fairly well as Turkey’s CPI has since printed above expectations and Oil and Energy has continued its tear on the back of the Saudi production cut.
Services Nugget: How Do the Central Banks React?
- Takeaways: Divergence between Fed and ISM sentiment. OPEC cuts and manufacturing bullish oil?
- More ground to cover for Powell to be reflected in USD strength
- We have built a sentiment tracker that uses FOMC minutes and speeches of Fed members as data and assigns positive and negative scores to adjectives in order to gauge what the Fed’s sentiment on the economy is.
The Weekly Market Monitor – Valuation Woes and Currency Moves
- Why did the seemingly marginally negative Apple news coming from China erase a whopping USD 200 billion in market cap?
- It seems like the US labor market has wrongfooted investors again, judging from the latest ISM Services and claims data.
- The Chinese Yuan has also rejoined its downward trend after a brief revival, and this does not bode well for equities.
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