TSLombard with the note: Households’ ‘excess’ savings haves urged globally in the midst of the pandemic, led by the US. American consumers’ surplus savings accumulatedsinceMarch last year ballooned to $2.4tn in June. But the boost toUSconsumption from households’ large savings buffers–whilst some of the largest globally–is likely to be short-lived and less than what headline
An excellent note from Nomura on exactly what we have been discussing for six months: The deviations between the Fed and the market’s economic sentiment and monetary policy outlook have become quite conspicuous, and we think that the two are likely to collide head-on in the near future. At this point, we expect the market
Goldman with the note. This is bullish for US growth, inflation and DXY deeper into 2022 and then beyond: Months after President Biden proposed major new spending programs financed with tax increases, the Senate finally looks poised to act on a bipartisan infrastructure bill and to take the first steps on a broader fiscal package.nIn
MUFG on the Fed this week: Fed in focus with USD set to remain supported as shorts are lightened USD: Fed tapering discussions “progressing”. The primary macro event this week will be the FOMC meeting on Tuesday and Wednesday and these meetings are increasingly important given we are gradually approaching the time of commencing the
Albert Edwards of Societe General with the note Many seem at a loss to explain the recent bond market rally in the face of higher-than-expected inflation data. Readers of these pages will not have been surprised, as the collapse in the credit impulse we have been highlighting was calling for just such a rally. More
JPM with the note: Just under a year ago, theFedcompleted its framework re-view and officially changed its monetary policy strategy to a flexible average inflation targeting (FAIT) approach. With the acceleration in inflation since then, PCE inflation now averages 2.0% over the past three years. Incoming months aver-age inflation over this three-year lookback period is
This debate matters a lot to H2 markets. There was roughly USD5tr in US fiscal stimulus in the second half of last year that won’t happen this year. This is an enormous growth headwind. But, of course, the private sector economy will be reopening at the same time, providing an enormous catch-up growth tailwind. Which
Morgan Stanley with a note on rising US wages. I agree that wages growth will be better this cycle than last owing to larger fiscal stimulus and faster growth but am still skeptical that it represents much inflation risk. Recent gains look like catch-up growth owing to temporary supply-side frictions. There’s plenty of underlying slack
It began with lumber prices a few weeks ago and it is now broadening out. Charts from Daily Shot. Goods prices are deflating as services catch up to normal levels: Core PCE has peaked: It’s mostly catch-up anyway: A long way to fall: Post-GFC saw the same panic: Panic fading: Structural inflation takes structural change:
Morgan Stanley with a note that I agree with: In our view, the announcement of a bipartisan infrastructure plan doesn’t augur a more modest price tag for fiscal spending. Rather, it underscores that the fiscal policy is better described as ‘all or nothing’. We note that several key Democratic Senators have already described their support
Goldman with the note. I see all the leftovers going into the Reconciliation bill, no worries: What a Bipartisan Infrastructure Deal Might Mean A narrow bipartisan infrastructure deal primarily focused on traditional infrastructure is looking more likely to win White House support. The spending it includes already looked very likely to become law, in our
While Australia’s treasonous government is hell bent on flooding the nation with foreign workers to overcome purported labour shortages, President Joe Biden has given an honest solution to employers: “pay them more”: The solution to the labor shortage is, according to President Joe Biden, as simple as a higher wage… He told journalists at the
Morgan Stanley with the note. Rate of change is the most important and misunderstood idea in macromarkets: Tapering is Tightening but Tightening began months ago. The Fed’s pivot to begin the tightening discussion caught most by surprise, but markets began discounting this inevitable process months ago in our view. It’s exactly what the mid cycle
You can show a traitor a noose but you can’t stop him from sticking his head in it. For years I have warned prominent Australian investors not to invest in China and watched as they all lost a lot of money. The reason why is not even China’s deteriorating geopolitical circumstances. It is that sovereign
Goldman with the note: The FOMC left the funds rate target range unchanged at 0–0.25% at the June meeting, and raised the IOER and RRP rates by 5bp. The median projected path for the policy rate in the Summary of Economic Projections (SEP) increased to show two hikes by 2023, despite almost no change in
BofA with the note: The economy is facing an imbalance: a burst in demand has been met with constrained supply. Economics 101 tells us that when the demand curve shifts more than the supply curve, prices will rise, which continues until the balance is restored from a combination of slowing demand and greater supply. This
Some interesting sector-level trends in US credit card spending. Services spending is normalising swiftly as reopening gathers pace. There are early signs that goods spending is falling away as well: Eating out is now up on pre-pandemic levels. Travel is roaring back to almost unchanged from 2019. I expect a big overshoot ahead. Interestingly, goods
Nordea with the note. I see US inflation tumbling next year: We see clear risks of a big positive surprise to the May inflation report as well with core inflation around or just above 4%. The market is still buying the transitory inflation narrative but for how long? Lately, increasing (US) inflation has been the
Deutsche with the note: Since the last CoTD, Bloomberg’s US financial conditions index has eased to fresh14-plus year highs. This index looks at money markets, various credit spreads and equity markets. However Bloomberg also compiles a financial conditions “plus” index where they include indicators of asset-price bubbles incorporating tech shares, housing markets and additional yield
Goldman with the note: President Biden released his budget proposal to Congress, which calls for an increase in the deficit of $800bn over 10 years (0.3% of GDP over that period) to accommodate his “American Jobs Plan” (AJP) and “American Families Plan”(AFP). While the amount is not surprising, this is the first time the White
BNP with the note: The April payrolls report was a historic surprise to the downside, and in our view evidence of supply constraints–be they supplemental federal unemployment benefits, residual Covid-19 fears, childcare demands, or pulled-forward retirements–materially limiting job gains. While our view is that these constraints will prove to be temporary, some evidence is emerging
Being rich and tough is just not enough, apparently. In a recent promotional tour for Fast&Furious 9, John Cena called Taiwan a country. Now he is on his knees kissing CCP freckle: The 44-year-old American, who made the comment on Taiwanese broadcasting network TVBS during a promotional tour for the Hollywood blockbuster Fast & Furious
As inflation-deluded markets begin to wake to the China deflation shock that’s been obvious to MB readers for months, I am beginning to wonder if what lies ahead is a little less benign than my original thoughts. There is no cause for panic. If the worst were to come to pass and a market accident
A great note from Nataxis on US inflation. Chill! Historical Backdrop In the post-WWII period, the United States has seen just a couple of problematic periods of significant inflation. The most recent of which was a 10-year period with two bursts of accelerating inflation in the 70s/80s. First, inflation quickly accelerated in 1973, before peaking
Is a new US housing bubble inflating? US house prices have been on the march with global prices. Is this a rerun of the pre-GFC period when prices were driven wild by the worst collapse in lending standards in history? Or is this something different? Deutsche is worried: Around many parts of the world housing
