ridethepig | End Of The Cycle
A good one for the history books ... the aim to highlight is that we are now much closer to the end of the cycle than we were last year.
Deja Vu?
Tracking the S&P all time highs very closely; the recession scares are showing signs of emerging though the woodwork. Bears will know that it took a lot of "fuel" just to get back to these levels, they smell weakness and know momentum reversing here will do significant damage to anyone exposed.
The front running of Central Banks by pricing in rate cuts over the next year is too ambitious and risks for disappointment are high. With global PMIs all turning down and showing signs that further softness will persist in the current macro climate. Utilities are rejecting the highs:
The Sicilian defence is underway in cyclicals vs defensives:
Markets are starting to trade the reflation theme as Equities, Bonds and Cryptos break higher simultaneously. With China pledging to keep the RMB stable is a big deal as it allows Asian currencies (under the blessing of KRW) to outperform. To put simply, RMB stabilising is a necessary condition to a weaker USD and a weaker USD is necessary for financial conditions globally to ease debt burdens on USD funded economies. It will take two to tango, and hence why we are set for an important Fed this week. Markets are currently pricing a 25bp cut this Wednesday, however global risks remain elevated around growth meaning it may not be enough to help conditions.
Thanks for keeping the likes coming, this will serve as a timeless classic as we enter into the next chapters in the Economic cycle.
All the best
Deja Vu?
Tracking the S&P all time highs very closely; the recession scares are showing signs of emerging though the woodwork. Bears will know that it took a lot of "fuel" just to get back to these levels, they smell weakness and know momentum reversing here will do significant damage to anyone exposed.
The front running of Central Banks by pricing in rate cuts over the next year is too ambitious and risks for disappointment are high. With global PMIs all turning down and showing signs that further softness will persist in the current macro climate. Utilities are rejecting the highs:
The Sicilian defence is underway in cyclicals vs defensives:
Markets are starting to trade the reflation theme as Equities, Bonds and Cryptos break higher simultaneously. With China pledging to keep the RMB stable is a big deal as it allows Asian currencies (under the blessing of KRW) to outperform. To put simply, RMB stabilising is a necessary condition to a weaker USD and a weaker USD is necessary for financial conditions globally to ease debt burdens on USD funded economies. It will take two to tango, and hence why we are set for an important Fed this week. Markets are currently pricing a 25bp cut this Wednesday, however global risks remain elevated around growth meaning it may not be enough to help conditions.
Thanks for keeping the likes coming, this will serve as a timeless classic as we enter into the next chapters in the Economic cycle.
All the best
