Looking Across The Valley Global equities are off to a strong start in 2023. Investors have chosen to look across the valley of softening fundamentals – focusing instead on declining inflation, the near completion of central bank rate increases and moderating long-term rates. Notably, the...
WATCHING WAGES As inflation continues to moderate, attention has shifted to a narrower aspect of the price story – non-shelter services inflation. This component represents the aspect of inflation most closely tied to wage growth, and is proving the most resistant to...
A MESSI YEAR Congratulations to Argentina for winning their third World Cup, putting them behind only Brazil (5), Germany (4) and Italy (4)* for most World Cup titles. Team captain – and global superstar – Lionel Messi’s only World Cup title certainly came during a messy...
A PIVOTAL YEAR 2023 will likely be a turbulent year as inflation and monetary policy fears pivot to a weak global economy, but also to lower inflation and central bank pauses. We see some fundamental downside risk but sentiment upside. Read the full article: VIEWPOINTS JANUARY 2023....
A NARROWED PATH Extraordinary volatility continues in financial markets as investors grapple with the outlook for inflation, monetary policy and the eventual economic impact. We experienced some welcome upside volatility in both stocks and bonds recently as consumer price inflation (CPI) finally delivered a positive surprise. Read...
BUMPY PATH TO THE PEAK We have written for months about elevated volatility being a recurring issue as long as the market was uncertain about how high interest rates were going. Higher than expected inflation reports in recent months have led to increased expectations around monetary...
PREPARING FOR WINTER “Winter is Coming” was the name of the very first episode of HBO’s very popular Game of Thrones television show; and it quickly set the plot for the series: After the longest summer in history (10-plus years), preparations are being made for an...
GROWTH WEAKER BY DESIGN A negative inflation surprise for the month of August and more hawkish Federal Reserve rhetoric dashed investor hopes that the end of the Fed’s rate hike campaign was in sight. Instead, interest rates have moved higher and equity markets have moved lower....
PEAK INFLATION Equity markets have rebounded smartly since mid-June during a period of weak growth and poor sentiment, but solid earnings and what we think is a likely peak in inflation. Better-than-expected earnings reports, coming at a time of extremely poor investor sentiment (a positive contrarian...
CONFLICT Inflation, along with the second order negative impact on growth, remain top of mind for markets. The U.S. June Consumer Price Index (CPI) print of 9.1% year-over-year (y/y) was the second consecutive negative surprise. As shown below, there is a real conflict between the current...