Economic data changes have fallen below a key threshold typically followed by higher volatility and moderate drawdowns across equity markets. The Eurozone appears most susceptible to trouble with the U.S. and many emerging markets having yet to see similar economic setbacks.
Today's topics include OPEC production cuts, emerging markets, the leveraged loan market, the price of lumber, Argentina, volatility and predicting the next recession.
Emerging markets are being rattled by a rising U.S. dollar and end to global synchronized growth. Equities in East Asia and Europe appear susceptible to further drawdowns. On the flip side, South American economic growth remains mostly rosy, favoring stable-to-rising equity prices.
The end of the Iran nuclear deal presents an exit strategy for OPEC's production cuts. The dual threat of uncontrolled collapse of production in Venezuela and renewed sanctions on Iran will force Saudi Arabia and OPEC to change course.
The cost of doing business is rising, but these costs are not yet being passed along to the consumer.
Today's topics include the yuan, a cashless society, corporate refinancing needs, rising concerns in China, share buybacks, Argentina's bailout options and bitcoin.
The handout, audio replay and webinar replay of our May 10, 2018 conference call titled Look Forward, Not Backward can be found below. The handout can be found here (starts with the second post). The audio replay can be heard below: The webinar replay is below:
Deregulation Earnings Tax Cuts
Bloomberg.com – Jim Bianco and Ben Breitholtz: Economic Surveys Are a Danger to Markets So-called soft data suffer from a circular reference due to groupthink, herd mentality and political preferences. Wall Street treats surveys or opinions of economic activity, otherwise known as “soft data,” worked very well in predicting the economy for decades. But starting in the mid-1990s,… Continue reading Economic Surveys Are a Danger to Markets
Summary An end to global synchronized growth poses risks for lopsided short positioning in long-end U.S. Treasuries. The Federal Reserve and markets are pricing in very little uncertainty, but news trends indicate uncertainty over central bank policies are indeed on the rise. Fair value models suggest U.S. 10-year yields are more so poised to fall… Continue reading What Does Work