Read on the Trading Floor - 07 Feb 2024
Today’s focus… New content on Harkster, same message from CB's and much more
Macro Themes At Play
Theme 1 - New content streaming through Harkster.com, all your research in one space
Theme 2 - Drifting
Theme 3 - Too early to declare victory
Theme 4 - CRE portfolio repricing continues in the background
Further reading and listening of note
Theme 1 - New content streaming through Harkster.com, all your research in one space
Stream your favourite financial content into a Harkster research inbox, including bank publications, independent research, podcasts, financial press and more. "It's like Tweetdeck for financial research". Some of the latest additions are as follows…
Across The Spread by Weston Nakamura
AlphaPicks on Wall Street
American Economy Daily
Celeritas Capital
NatWest - The Currency Exchange
Paulo Macro
PrimeTrading - US Equity Swing Trading
SpearPoint Equity Alpha
The Next Economy by Florian Kronawitter
Two Minute Drill by James Barrineau
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Theme 2 - Drifting
... another quiet session with limited top tier data, little in the way of fresh impetus as assets are bobbing on a sea of liquidity (BoJ/PBoC still pumping > Fed/ECB/BoE reduction) and waiting for something to happen. With US fixed income vol reducing (10s retracing to 4.10%) and Vix sliding, there’s noting to stand in the way of the inevitable drift towards 5000 for SPX (humans love round numbers). Most G10 FX is within a spread of its London morning opening levels... EUR 1.0760, JPY 148.05, GBP 1.2620, AUD 0.6520. Elsewhere the positivity has spread into commodities with Gold 2040, Crude 73.50 and Brent 79.00.
What can change the investment landscape....?
Will it be a Chinese fiscal package pre/post Lunar NY?
Will the market come to the realisation that the Fed will not cut as the US economy re-heats?
Will the market cheer a ceasefire in the middle east?
Will the inevitable drift lower in vol induce a carry frenzy into Easter?
Theme 3 - Too early to declare victory
Mester, Kashkari, Schnabel and Breedon... global central banks have rolled in unison from team transitory to team higher for longer to now entering a new regime, as they remain open to cuts IF confidence rises, #team too early to declare victory.....
Reuters - Fed's Mester open to rate cuts if it's clear inflation is easing further
Bloomberg - Fed’s Kashkari Says Need to See More Progress on Inflation
Econostream - ECB Insight: Schnabel Pushes Back Against Market Pricing, but Carefully, Slamming No Doors
FT - Isabel Schnabel: ‘The last mile of disinflation may be the most difficult one’
Bloomberg - BOE’s Breeden Signals She’s Likely to Wait Before Cutting Rates
Theme 4 - CRE portfolio repricing continues in the background
As housing recovers on both sides of the Atlantic, it's the office space that's under considerable pressure as the maturity wall approaches and workers fail to return to the office. Destination / modern offices are still performing, but any space that needs to be materially renovated / modernized is being marked down (FT - Canary Wharf office takes 60% hit in distressed sale).
Source Moneyfacts via Bloomberg
S&P Global - Halifax House Price Index
Bloomberg - NYCB Extends $4.5 Billion Stock Rout to Lowest Level Since 1997
Bloomberg - US Commercial Real Estate Contagion Is Now Moving to Europe
Home Economics - The Office Real Estate Apocalypse is Just Beginning
Blind Squirrel Macro - Just waitin' for the maturity wall
Theme 4 - China
Expectations are steadily rising that this latest wave of intervention is going to be something more material than just financial. An economic turnaround is needed not just financial mechanics. With the early short squeeze now complete, Xi and his team have to deliver.
WSJ - China Offers Support to Accelerate EV Makers’ Global Push
Bloomberg - Alibaba Okays Another $25 Billion Buyback After Sales Miss
Bloomberg - China Replaces Top Markets Regulator as Xi Tries to End Rout
Gordian Knot - China Trends: Pause or Continuation? Navigating Rates, FX, and Equities
Yahoo - China Share Buybacks Hit Three-Year High Amid Market Slump
Bloomberg - Traders Boost Bearish China Options Bets Even as Stocks Surged
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Top Pieces
Discovered on Harkster.com
FT - Uber posts first full-year operating profit and boosts buyback hopes
Stock Market Nerd - Uber Earnings Review
Bloomberg - Pimco Sees Multiple BOJ Rate Hikes Starting as Soon as March
Times of Israel - Hamas Proposes Three-Stage Ceasefire Over 135 Days, Leading To End Of War
Morgan Stanley - What Japan Can Teach the World About Longevity
JPM Global Data Pod Research Rap - US core inflation to bolster Fed confidence
The Lead-Lag Report - Credit Card Delinquencies Surge 50%
Steno Research - Inflation Watch: Adjusting for revisions, tax, seasonality and sunspots
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