In today’s briefing:
- Yield Curve Steepening: Positioning Across the Curve
- Make or Break? A Close Examination of Company Earnings as We Head into Q3 Earnings Season
- The Great Game – Polish Election Shocker
- The Energy Cable #42 – Quiet Self-Gratulation and Then onto Natural Gas and Crude Oil
- CX Daily: Hamas Attack on Israel Reignites Region’s Cycle of Violence
- UK: Delayed Jobless Data May Shock
- Money Watch: Monetary trends scream >2% inflation still (in the US)
Yield Curve Steepening: Positioning Across the Curve
- Treasury yields have surged over the past 3 months and reached their highest level since 2007 amid a historic bond selloff.
- Longer-Duration yields have outperformed in the recent rally due to the effects of higher term premiums.
- Higher yields contribute to tightening of financial conditions, making further rate hikes by the Fed less important.
Make or Break? A Close Examination of Company Earnings as We Head into Q3 Earnings Season
- All our forward-looking EPS indicators have shown improvement over the past few months. Nevertheless, our aggregated bellwether EPS indicator points to negative earnings growth, while investors anticipate the opposite.
- Developed Market earnings per share are well above the long-term trend. One must make a compelling case for earnings to structurally grow faster to sustain this trend.
- Big Tech’s earnings superiority has vanished. With a significant concentration of expensive stocks in Big Tech, earnings expectations must be exceptionally (perhaps unreasonably) high.
The Great Game – Polish Election Shocker
- Welcome to this week’s Great Game – your weekly geo-political overview.
- This time around, we will cover a couple of current issues:Polish Election ShockerEurope was shocked when the first exit polls from the Polish parliamentary election hit the news on Sunday.
- Everybody expected the PiS party to be the biggest party and in a position to form a comfortable coalition government, but the Polish electorate wanted differently.
The Energy Cable #42 – Quiet Self-Gratulation and Then onto Natural Gas and Crude Oil
- Horrid scenes and continued unrest in the Middle East with major oil producing nations perhaps getting involved.
- What are the probable implications for oil, and how about natural gas given the winter ahead and Europe’s dependence?
- Take aways: Things are setting up for explosiveness in European gas marketsMBS plays a key role with regards to the direction of oilBefore we dig in to our analysis, we would like to turn the reader’s attention to our energy cable from last week, where we questioned the drop in implied gasoline demand in the US and provocatively asked ourselves what the New Yorkers were using as fuel if not gasoline.
CX Daily: Hamas Attack on Israel Reignites Region’s Cycle of Violence
- Israel-Palestine /Cover Story: Hamas attack on Israel reignites region’s cycle of violence
- Fraud /: Hong Kong takes aim at banking fraud as complaints surge
- Securities /: China tightens rules for short selling to prop up stocks
UK: Delayed Jobless Data May Shock
- The ONS postponed its UK labour market data by a week to provide time for better estimates amid low response rates, although the response trend is not a surprise.
- Residual seasonality may have caused the unemployment rate to round down in August, encouraging the ONS to wait for more confirmation before dropping that bombshell.
- Wage growth slowed slightly while bonuses dropped to a normalised share. The BoE discounted their height in September, so CPI and postponed UR releases matter more.
Money Watch: Monetary trends scream >2% inflation still (in the US)
- Being away from the desk for a few days allows me to take a step back and ponder about some of the biggies in global macro.
- I have spent the first few evenings in Spain investigating the intriguing differences between Europe and the US in monetary terms.
- Conclusions up front:USD monetary trends keep outpacing EUR peers, leaving a stickier inflation picture ahead in the US.
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