Uncertainty is rocketing higher in Italy and the broader Eurozone due to the rise of populism and slowing economic growth. We find Google search activity by the citizens of Italy are a leading indicator of uncertainty and Italian 10-year yields relative to the major economies of the Eurozone. These search trends must persist to warrant such abrupt spread widening.
Broad outflows from cross-over investors in emerging markets offer opportunities for investors. Falling energy prices and lower Treasury yields will provide some relief, and even tailwinds, for some emerging markets.
Groupthink and herd mentality are distorting soft (economy survey) data. The fear is the Fed may be overly aggressively in raising interest rates by relying on this data.
Today's topics include the neutral funds rate, EU skepticism, floating-rate debt, shadow banking in China, cryptocurrencies, CLOs, quant funds, junk bond defaults, equity concerns, OPEC output, Japanese growth and central bankers want to be popular among ordinary folks.
An end to the OPEC agreement to cut oil production is in sight, only the terms are up for debate. Concerns over global supplies have driven markets to look past signs of weakening demand.
Consumer search trends within Germany, France, Italy, and Spain are reflecting slowing spend. Germany leads the pack in a deteriorating outlook, but some bright spots exist in Spain. Real GDP is expected to slow toward 2.2% year-over-year into year-end.
Today's topics include rising U.S. yields, Italian yields, the Trump trade, crude oil's impact on GDP, CLOs, the consumer staples sector lagging, EM currencies, the seven-year note, margin debt, gaining 2,000% by trusting the Fed, Japan and the stronger U.S. dollar.
The Fed has been very direct in its intentions to hike rates. The markets have heard the message loud and clear, pricing in extremely high odds of hikes at the next several meetings. This degree of certainty usually ends badly.
Uncertainty reflected by both Fed officials and markets over tightening policy has become ultra-low. The Fed is transitioning away from not only financial stability concerns, but also employment in general. The consumer's ability to remain healthy and spend will dictate policy.
Declining search traffic for rental housing is bearish for industrial metals and a number of typically non-cyclical industries in the S&P 500.