Inflation Tag

Chinese Devaluation Seems Likely

16 Aug, by Steven Vannelli, CFA in Economy

Over the weekend, we got a slew of data showing a generally weak economy. Below are the actual data compared with the expectations from Bloomberg. Of course, the headline grabber was the -31.4% drop in residential property sales, but across the board, from industrial production to...

Bullish Back Half

01 Jul, by Steven Vannelli, CFA in Markets

We think we could see a bullish back half of the year for equity markets. Our analysis follows in our Quarterly Strategy Report. Prefer to download this presentation in PDF? Please click here. 1. Summary -In the first half of 2022, markets experienced the largest wealth destruction...

Inflation, Growth, China and Financial Markets

19 May, by Steven Vannelli, CFA in Economy, Markets

All year inflation has been the narrative driving markets. Since December 2021, once the Bloomberg Commodity Index (BCOM) took off, rates have risen in tandem. But, interestingly enough the BCOM has been flat since peaking on March 8, 2022. Every day we seem to be blasted...

The Chinese Devaluation Continues

11 May, by Steven Vannelli, CFA in Economy, Markets

Just today, as US inflation came in a touch hotter than expected, the Chinese Yuan is pulling lower, testing the lows of May 9, 2022. The five-day rate of change is fairly extreme by anything we’ve seen over the last few years. The last time...

China’s Potential to Alleviate Global Inflation

07 Apr, by Steven Vannelli, CFA in Economy

For a confluence of reasons ranging from COVID to property sector problems, China has been experiencing slower growth. Many cross-asset relationships suggest that a devaluation in China could help spur growth. Whether this will happen is another story, but if the Chinese Yuan began a...

Is Inflation on the Cusp of Coming Down?

09 Feb, by Steven Vannelli, CFA in Economy, Markets

Tomorrow we get the consumer price index year-over-year for January, with expectations for 7.25%. This would take the CPI to a new high for the cycle, rising from 7% year-over-year from December. We would like to see the print undershoot and offer several reasons why it...

Does the Fed Have a Brewing Velocity Problem?

17 Nov, by Steven Vannelli, CFA in Economy

A basic tautology that economists consider when thinking about monetary policy is the velocity of money. MV=PQ translates into Money*Velocity=Price*Quantity. Of course, price*quantity is nominal GDP while “M” is the money supply (for example, M2) while “V” is velocity, or the number of times the...

Is Inflation Starting to Impact Equity Returns?

12 Oct, by Steven Vannelli, CFA in Economy, Markets

Fed funds futures for 2022 and 2023 have broken out to new highs, likely on the back of rising inflation expectations. As things stand now, the market is looking for three hikes by the end of 2023, with the effective fed funds moving from 8bps...

Mid-Quarter Update: What Does Transitory Mean?

02 Sep, by Steven Vannelli, CFA in Economy, Markets, Portfolio Management

In this Mid-Quarter Update, we discuss our analysis on the following topics: -Recent readings on consumer confidence have rolled over. The surveys are validated by the stagnation in real consumer spending in the last few months. -In conjunction with the slowdown in house sales and durable goods...

Get Ready for Services Prices to Accelerate Higher

22 Jan, by Bryce Coward, CFA in Economy, Markets

We're going to keep this post short and sweet because the charts speak for themselves. Today, preliminary Markit PMIs were released for January. Headline numbers ticked up, which is great and shows a continued expansion into the new year. The release also showed that input...

More Evidence of Stagflation in the PMIs

16 Dec, by Bryce Coward, CFA in Economy

Markit's preliminary December PMIs were released today and our takeaway is that they show the risk of some kind of stagflation is gaining a little steam. In both the manufacturing and services surveys, new business/new orders dropped while input prices rose. In the case of...

The Probability of Stagflation is Rising

10 Dec, by Bryce Coward, CFA in Economy, Markets, Portfolio Management

This week we were privy to both new inflation and initial unemployment claims data. The CPI data revealed a rather mundane inflation scenario. Meanwhile, the weekly initial claims number came in at a whopping 853K and missed estimates by the largest amount since June. Yet,...