Read on the Trading Floor - 29 Nov 2023
Today’s focus… US consumer continues to spend like theres no maturity wall coming, deflation coming to Europe, XBT + Gold correlation and much more
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Macro Themes At Play
Theme 1 - US consumer is stronger than the Cleveland Browns Defence
For all the talk of a weakening US consumer, dwindling savings, tightening credit, slower lending into the economy, Q3 performance was only because Taylor Swift going on tour, maturity wall approaching etc etc etc boy has the US consumer spent a lot of money over the holiday period. Travelling hit record levels (h/t Ben Carlson @awealthofcs) as well as Cyber Monday demonstrating 9.6% YoY growth as Black Friday also beat low expectations. The wage negotiations like UAWs agreement is most certainly benefiting households (The Economist - Welcome to a golden age for workers)
Bloomberg - Cyber Monday Sales Reach Record $12.4B Despite Inflation, High Rates
TKer by Sam Ro - The 'critical' consumer shift that could define stock market performance in 2024
Theme 2 - Deflation in Europe
Research has been leading the charge on deflation in Europe (5 THINGS WE WATCH: CBS, EURFLATION, OPEC, IFO, DUTCH POLITICS) and today's data set disappointed to the downside with aggressive MoM contraction in European CPI prints from Spain through the German regions. Looking into 2024, how can the ECB not cut more than the FOMC? The uneven fiscal support and diverging relative growth mean the disinflation process will be uneven across the Atlantic, relative to the global inflationary shocks that we saw from covid reopening, deglobalisation, extended supply chain issues from China. Disinflation may hit Europe faster and deeper than the US which means ECB will have to respond quicker and potentially deeper?
ING - Eurozone inflation is on track towards 2% while sentiment remains sluggish
Econostream - ECB’s Stournaras: Don’t Expect First Rate Cut Until Mid-2024; April ‘a Bit Optimistic’
Nordea - EUR rates: There and Back Again
Source Bloomberg
Theme 3 - Everyone's chart of the day ... Gold testing 2080 triple top
Waller’s comments, Dec seasonals, money chasing momentum trades to end the yr, CB reserves management etc etc etc. @harksterHQ would never claim to be a gold expert, but there are plenty of reasons why the shinny block is in vogue to end 2023.
Source Bloomberg
However, the second chart I find more interesting… the digital gold that many hodlers declare Bitcoin to be has demonstrated little to no correlation with Gold over the past 3 to 6 months, with an R squared of 0.0 ....
Source Bloomberg
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Top Pieces
Discovered on Harkster.com
Time we all started learning how to use AI as a co-pilot
Two of @harksterHQ's favourites ...
aka The MacroTourist andBoE staff blog ... US supply chain exposure to China
Bank Underground - Supply chain disruptions: shocks, links, and hidden exposure
UK households facing a maturity cliff, high inflation, rising tax burden and poor economic growth
- - Do We Get A Stronger Yuan?
Concentration in performing stocks ...
Saxo Markets Equities - Dangerous index concentration, cyber security stocks, and the wisdom of Charlie Munger
It's not been a month since we were reading about Jamie Dimon and other exec's selling shares
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