MacroSquawk

Recap     Hello all, and welcome back to the February rendition of MacroSquawk. If you've been able to read the previous blog coming into 2020, all I have to say is, "wow, what a trip." It seems that the macro view on lower inflation expectations has been validated, and much quicker than I had initially expected leading to this month's and the first half of this year's views. Macro View      Coming into the next few weeks however, I think the dominant theme is going to be a commodities rebound (more below). More importantly, I think the events of this January/February period with the virus have fundamentally shifted the macro landscape in a meaningful way. Chief among these is the prolonged nature of the manufacturing rebound that we are likely to see in China, and by extension perhaps the rest of the world. It seems now that for 1Q and maybe even 1H, the US will be the bastion of (moderate) global growth leading markets higher. This is as a result of lukewa...

Note: Due to the political nature of this discourse, I give a disclaimer that this is an economic framework that I am continually looking to inform my opinions on. It is not the case that these are strong-held convictions, rather ideas about economic policy I am developing and following to what seem to be their logical conclusions to aid understanding macro markets. My views are subject to change as more information comes to light. The aim of this discourse is to detail a possible relationship between credit, wages, inflation, and interest rates and how they help us to inform our view on the strength of an economy so that we can understand the effectiveness of its political institutions and administration, understand where it is in its business cycle, and eventually come up with trade ideas based on these views. The most important part of this is having an understanding of credit and credit cycles. This is because credit is what helps to increase the supply of money in the econo...

Hi all, Welcome to and thank you for checking out the next Macro Squawk blog post. Coming into the beginning of 2020, we see a lot of positive supports for risk assets everywhere - chief among these being the 'resolution' on trade ahead of the election, a reduction of Brexit uncertainty, and a moderated outlook from the Fed about interest rate expectations over the course of the year, along with Europe leaning closer towards liberal fiscal policy at the behest of Christine Lagarde. I think Druck said it best in his December interview with Bloomberg that "it's all systems go,"... at least for now. Given this macro backdrop, lets dive right into some interesting trade ideas that I see around. Long AUDUSD First and foremost we're finally starting to see the long Aussie trade work out. The reason that this is a trade worth considering is because it has both macro and micro factors working for it. We know that Australia is a big commodity currency and that a...

Hi all, It's been a busy week of news and data this Thanksgiving holiday. Most notably, we saw the signing of the Hong Kong Human Rights and Democracy Act almost unanimously in Congress. The worry here is that it'll lead to retaliation ahead of the critical December 15th deadline for some resolution to the Phase 1 deal on trade. As a result, we've seen a broad selloff in risk assets across the world. But what exactly are the intermediate term implications of this act? Upon further examination, it would seem that it is not as biting as it would first appear which could afford an opportunity to fade a lot of the moves we have seen over the past week. This is because what it specifically accomplishes is that it requires Require the Secretary of State to issue an annual certification of Hong Kong’s autonomy to justify special treatment afforded to Hong Kong by the U.S. Hong Kong Policy Act of 1992 Require the President to identify, and impose sanctions against, persons r...