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It’s another bear market rally, says the excellent Michael Hartnett at BofA.
Tale of the Tape: China PMI greatly outperforming US ISM(Chart 3) = big China reopening = RoW>US; but only once hard landing tames US inflation can 10-year US Treasury yield (>4%) catch-down to China bond yield (<3%–Charts 4 & 6).
The Price is Right: war, deglobalization, fiscal excess, bailouts, net zero…higher inflation & rates…lower P/E; but note high rates benefit big savers & Eurozone household savings rate (14%), UK (9%) way higher than 4% in US (one reason Europe macro good–Chart 13).
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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
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