Steen Jakobsen, Saxo Bank:
Four interesting charts as market continues to think Q1 is merely weather (ignoring that “hard winter was only East Coast of US – which is roughly 20% of US economy!)
This is NACM credit extended from National Association of Credit Management – I have taken data annualized change and made it lead by six month (avg. credit to impact lead-lag) – and then plotted it vs. 10 YR generic yield
Source for data: : http://web.nacm.org/CMI/PDF/CMIcurrent.pdf
Ran my St. Lois Fed charts – found this “new break of trend” surprising…
Atlanta FED GDPnow (“real time” GDP tracker) is going from bad to worse…..
Old one but… Albert’s chart is still valid – there IS connection btw economy and profit despite denial from Wall Street…
Strategy:
Following my own advice:
Move to “cash = US 10YR +30YR + TIP) – Take six month “off” (except six month off for me means more travel – Slovenia+ Croatia this week and Singapore + Kazakhstan next week)
85% in FI now – up from 75% (reduce equity to 15% overall mainly)
MACRO CALLS:
– 2015 is lost year for recovery in macro, but micro economy will improve and set-up 2016H2 recovery
– FED will hike in 2015. Not due to economics but as margin call on asset inflation (I have 40-60 on June/September)
– US dollar will hit 1.00 vs. the EUR on shortage of US funding (which will be major buying opportunity)
– EMG + China will hit low in economic growth this year on stronger US dollar and lower commodities setting up biggest discount in decades.
– Stock market has 10% more upside vs. 30% downside. Expected return in 3,5,7 years is exactly ZERO & I have company from one of the best in industry: Druckenmiller http://www.bloomberg.com/news/articles/2015-04-10/druckenmiller-recounting-soros-experiences-blasts-fed-policies
