Oil
Commodity market analysis usually focuses heavily on supply-demand balances. Yet in this framework piece, we argue that reported balances are an overrated gauge of underlying commodity price trends.
MacroQuant remains tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold.
US intervention will likely force out Maduro from Venezuela and reopen the economy. This could increase Venezuelan crude production in the long run, a modestly bearish outcome for oil markets over cyclical and structural horizons.
MacroQuant is tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold and copper.
US restrictions on Russian crude exports could disrupt global oil supplies and trade flows over the near term. However, they are unlikely to have a meaningful impact on crude prices over a cyclical timeframe. Stay short Brent.
In this Q4 Strategy Outlook, we discuss where we stand on our recession call, the outlook for stocks and bonds in various scenarios, why investors are misunderstanding the impact of AI on corporate profits, whether the US dollar has entered a structural downtrend, our perspective on the yen, gold and other commodities, and much more.
We remain cyclically short Brent but are tightening the stop loss to $73/bbl to guard against a geopolitics-driven upside break.
MacroQuant sees downside risks to stocks over a long-term horizon but is not yet saying that we are at imminent risk of an equity bear market.