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Two things that caught my attention this week 12/16/18

Two things that caught my attention this week, 12/16/18:

  1. Big week – Fed meeting.  In our view, Fed’s choice = lose a little credibility now (by backing off hike)s, or lose a lot of credibility in 1q19 (by potentially being forced to take more drastic action.) 
  2. Most pronounced HY market issuance drought in 10 years yet another important signal that the economy is slowing down rapidly – will the Fed heed the message this week? 

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Two things that caught my attention this week 12/9/18

Two things that caught my attention this week, 12/9/18: 

  1. Emerging Markets ETF (EEM) v. SPX bottomed in early October; this is a non-sequitur relative to consensus narrative, position – we’re watching with interest.
  2. Rising US deficits into an ongoing foreign UST buying strike now crowding out US economy after having crowded out EM’s earlier this year; Check to you, Fed.

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Two things that caught my attention this week 12/2/18

Two things that caught my attention this week, 12/2/18

1. Initial G20 thoughts:  Tough to read too much into US/China G20 mtg yet, but we do know this: US is saying "You need to reduce trade surplus by buying more real stuff fr US", not "You need to buy more USTs".  The implied change in flows is potentially critical – needs a weaker USD over time, but flows should drive stronger USD near term cet par).

2. Ned Davis Research Global Recession Indicator is now very much in the danger zone, at level last seen in late 2015, late 2011 (EU crisis), late 2008…& it is still rising.  Continue to think we are much closer to Fed truly blinking, even as long USD positioning is at 2+ year extremes.

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Luke Gromen, CFA
Forest for the Trees

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