ECB Preview

Christine Lagarde will chair her third ECB meeting Thursday.  She faces growing risks of recession but also widespread skepticism within the ECB regarding the efficacy of negative rates.  Markets have priced in several rate cuts this year.  Here, we discuss what measures the ECB may take this week. Continue reading “ECB Preview”

Drivers for the Week Ahead

  • Risk-off sentiment continues to build as the coronavirus spreads
  • Fed easing expectations continue to intensify; February inflation readings for the US will be reported this week
  • The ECB meets Thursday and markets are split; the stronger euro is doing the eurozone economy no favors
  • The UK has a heavy data release schedule Wednesday; UK government also releases its budget that day
  • Japan has a fairly heavy data week; the yen continues to benefit from risk-off sentiment Continue reading “Drivers for the Week Ahead”

Updated Democratic Primary Timeline

Super Tuesday has come and gone. Bloomberg has suspended his campaign after an extremely poor showing, and Warren is expected to follow suit soon. Here is our updated take on the likely Democratic candidate. Continue reading “Updated Democratic Primary Timeline”

Dollar Mixed Ahead of FOMC Decision

Some Thoughts on the Fed’s Surprise Cut

The Fed just surprised markets with a 50 bp intra-meeting cut.  The vote was unanimous, and the Fed said it will continue to act as appropriate.  This would seem to open the door for further cuts, but front-loading easing may also mean that they will ultimately need to do less in this mini-cycle.  In this piece, we discuss what the Fed can do, what it can’t do, what it should do, and what it will likely do. Continue reading “Some Thoughts on the Fed’s Surprise Cut”

Drivers for the Week Ahead

  • The dollar has softened as Fed easing expectations have picked up
  • Late Friday, Chair Powell issued an unscheduled statement saying the Fed is monitoring the virus and will act as appropriate
  • This is a big data week for the US; the Fed releases its Beige Book report Wednesday
  • Super Tuesday comes this week; Bank of Canada meets Wednesday
  • Final eurozone and UK February PMI readings will be reported this week
  • Reserve Bank of Australia meets Tuesday; BOJ Governor Kuroda released an emergency statement Continue reading “Drivers for the Week Ahead”

Some Thoughts on the Coronavirus

Global markets have gotten a reality check as the coronavirus spreads. While most expect this to mirror previous viral outbreaks, the ongoing uncertainty has markets fearing the worst. Here, we try to put this current outbreak into perspective but find that we are facing a unique situation. Until the scope of the outbreak becomes clearer, risk sentiment will remain negative. Continue reading “Some Thoughts on the Coronavirus”

Seven Big-Picture Considerations for Covid-19

Below is a non-exhaustive list of medium- and long-term implications from the Coronavirus. We discuss the yuan, China’s competitiveness, its position in the global production chains, the impact on the Phase One trade deal, and rising financial stability risks. Globally, … Continue reading Seven Big-Picture Considerations for Covid-19

Drivers for the Week Ahead

  • The still-growing impact of the coronavirus should keep the dollar bid this week
  • The Chicago Fed National Activity Index for January will be reported Monday; regional Fed manufacturing surveys for February will continue to roll out
  • The US economy remains strong, yet the US yield curve continues to invert; Fed speakers are somewhat limited this week
  • The UK Parliament returns from recess Monday; Japan has a very heavy data week Continue reading “Drivers for the Week Ahead”

DM Equity Allocation Model For Q1 2020

  • Developed equity markets remain near the highs despite mounting concerns about the impact of the coronavirus
  • MSCI World made a new all-time high last week near 2435 and is up 2.5% YTD
  • Our 1-rated grouping (outperformers) for Q1 2020 consists of Ireland, Israel, New Zealand, Spain, and Switzerland
  • Our 5-rated grouping (underperformers) for Q1 2020 consists of the Italy, Germany, Portugal, Japan, and Greece
  • Since our last update on November 19, our proprietary DM equity portfolio has risen 6.9%, outperforming MSCI World (up 5.7%) Continue reading “DM Equity Allocation Model For Q1 2020”