(Now) You are here
The Quotedian - Vol VI, Issue 54 | Powered by NPB Neue Privat Bank AG
“There's that great Irish joke: a man is lost in the countryside, stops a passer-by: 'how do I get to Dublin?'. The passer-by says 'well, I wouldn't start from here'.”
— Tim Crane
Back in January, on Jan 7th to be precise, I showed the following chart regarding US inflation in The Quotedian called “Ex-Ante”, which focused on the outlook for the year ahead:
Make sure to check out the updated version in the COTD section below (Spoiler alert: you are not there anymore, you are now somewhere else…)
The good old Quotedian, now powered by NPB Neue Privat Bank AG
Want to know where markets are and where they are heading?
Contact us at firstname.lastname@example.org
It’s been (relatively) quiet out there and you are getting tired of reading so much macro bla bla from the Quotedian. Let’s keep it short today :-)
Saying that yesterday was a pretty flat session for stocks would probably be quite THE understatement. Here’s the 5-day chart of the S&P 500 with yesterday 0.50%-range session highlighted:
Eight out of the eleven sectors closed higher, with some profit taking observed in tech and material stocks. Breadth was as in the previous session about 2:1 in favour of the winners, leaving us with following market carpet:
Most of the market “action” was earnings related and there within a bit focused after the market close. Before the opening bell rang, Goldman Sachs (GS) had reported a 58% earnings drop, which promised a wobbly start:
Wobbly at first indeed, but with a then a surprisingly positive resolution, given the earnings drop.
On the other hand, we had earnings reports from Netflix (NFLX) and Tesla (TSLA) after the closing bell, with both stocks falling eight and five percent respectively, which again is mildly surprising given the decent set of numbers delivered.
Ah, Mr Market is wonderfully confusing chap …
Anyway, as said, let’s press on:
A slightly negative tone prevails on Asian markets this morning, despite some efforts by China to boost private businesses and the real estate market. European and US index futures are trading flat to slightly lower as I type shortly after 8 am CET.
Most action in fixed income markets came for UK Gilts, which saw a sharp rally in prices, after yields dropped on a lower-than-expected inflation report. Here’s the 10-year Gilt yield:
This led to investors seeking out for longer duration assets, pushing global yields somewhat lower and also flattening the yield curve in the US back to a 100 bp spread:
The US Dollar was a another gainer yesterday, advancing versus most other major currencies:
Gold strength continued, despite the Dollar’s rally yesterday, which is an encouraging development for the gold bugs:
The slight dip in real yields (red line) seems to be responsible for the current Gold rally:
Ok, time to hit the send button.
Have a great day and make sure to check back in tomorrow!
CHART OF THE DAY
As advertised at the outset of today’s deliberations, it’s time to update our positioning on the inflation chart.
This seems timely, as two of my all-time favourite macro strategist (thanks V. and J.) just updated simultaneously, but independently, their inflation outlook, which are in tune where I think we could be:
So, in short, we are getting to a point where, if the inflation analog to the 70ies and 80ies continues to hold up, CPI should be starting to pick up again over the coming months. And this fits very well with the current narrative which has been slowly but steadily changing to disinflationary (US, EZ) forces at work if not outright deflation (China, Switzerland) reigning. Even the UK is hanging out the flags, after reporting an only (ehem, ehem)) 7.9% print for June.
Anyway, let’s stay tuned …
Thanks for reading The Quotedian! Subscribe for free to receive new posts the moment they are published.
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
The views expressed in this document may differ from the views published by Neue Private Bank AG
Past performance is hopefully no indication of future performance