Recession-Hard/Soft Landing
US durable goods orders delivered a negative surprise on Thursday. The 5.2% m/m decline in new orders for manufactured durable goods came in below expectations of a 4.0% m/m decrease and marks the biggest monthly drop since April 2020. On the one hand,…
Results of the Philadelphia Fed’s August Nonmanufacturing Business Outlook Survey sent a negative signal on Tuesday. The diffusion index for firms’ assessment of general business activity across the region relapsed and fell by 14.5 points to -13.1, indicating…
Chinese authorities have recently ratcheted up support for the currency. The PBoC continues to set its daily yuan fixing at a stronger-than-expected rate, with the yuan midpoint (a reference for trading that caps the range between +/-2%) at 7.1992 per dollar…
Investors should prepare for an equity market pullback this fall, prefer Treasuries over stocks, and US defensives over cyclicals. A pullback could also morph into another bear market given that monetary policy is tight, policy uncertainty will spike, global growth is slowing, and geopolitical risks are still high.
German producer prices indicate that inflationary pressures continue to moderate. The producer price index’s 6.0% y/y drop in July is more pronounced than the anticipated 5.1% y/y decline and marks the first annual decrease since November 2020 and the…
To the extent that Taiwanese export orders are a bellwether for global trade dynamics, the latest update for July provides a less pessimistic signal about the manufacturing cycle. It shows the pace of decline slowed sharply from 24.9% y/y in June to 12.0% y/y…
In an Insight last month, we noted that the Global Investment Strategy service increased its subjective odds for the resurgence of US inflation later this year or early next year from 20% to 30%. Here are some of the data points that they track and that point…
According to BCA Research’s European Investment Strategy service, German yields are unlikely to experience a decisive break out that would carry them to 3%. Five economic forces suggest that German yields are unlikely to move meaningfully higher in the…
The next six-to-nine months hold a crucial test of whether the equity market will ratify the soft landing and the Biden administration or not. If so, then markets will rally on policy continuity and likely gridlock. If not, then markets will struggle until the election is over and again in 2025-26.
Before doctors prescribe treatments to a patient, they first make a diagnosis. The success of the treatment is contingent upon the accuracy of the diagnosis. The same is true for a country’s economy. Many commentators use notions like debt deflation,…