Currencies

In this report, we look at the possibility of a dollar decline during any pending recession. In our view, the evidence is mixed. We are probably in one of the most anticipated recessions in recent history, and the dollar has risen a lot. But the dollar also tends to rise during most recessions. We recommend a neutral stance on the DXY, with a bet on some trades at the crosses.

Excess job vacancies in the US and UK reflect a labour market that cannot efficiently match unemployed workers with vacant jobs. This is because excess job vacancies reflect the shortage of labour supply in the 50 plus age cohort, whose skills are difficult to replace. In economic jargon, the post-pandemic ‘Beveridge curve’ has shifted outwards. Absent an unlikely shift in the Beveridge curve to its pre-pandemic version, killing US wage inflation will mean killing jobs. And killing jobs will mean killing profits. We go through the investment implications.

The narrative that the US can tolerate much higher interest rates, compared to the rest of the world has helped the dollar in 2022. In this report, we examine the sustainability of this thesis, from our holistic assessment of global growth indicators.

El marco de la oferta acodada ayuda a explicar por qué la inflación de Estados Unidos aumentó tan repentinamente poco después de que comenzara la pandemia y por qué es probable que la economía experimente una desinflación benigna en los próximos seis meses.

In this report, we identify the Norwegian krone as a currency that could outperform especially at the crosses, irrespective of the broad dollar trend.

Stocks will only get temporary relief from gridlock. Inflation will abate but then remain sticky. US and global policy uncertainty and geopolitical risk will remain historically high.