Charles-Henry Monchau

Chief Investment Officer

Chart #1 — 

January US inflation data surprise on the upside  

It was the most anticipated statistic of the week: the US inflation for the month of January. The year-on-year figure turned out to be higher than expected at +6.4% (versus +6.2% expected by the consensus) while the sequential increase was +0.5% (versus +0.4% expected). 

Inflation excluding energy and food rose by 5.6% (vs. +5.5% expected) on a yearly basis and by 0.4% sequentially (vs. +0.3% expected). 

While goods inflation (red line above) continues to decline (+1.4% vs. January 2022), services inflation (green line) continues to accelerate (+7.2% y/y), its highest level since July 1982. Housing had the largest contribution to the rate of price change with a 7.9% year-over-year increase. 

Housing is a lagging indicator, and it will certainly take several months to reflect the strong slowdown currently observed in the US housing market.



Chart #2 — 

The US consumer is (still) more resilient than expected  


Fourteen economic indicators related to US consumption and inflation were released last week. Twelve of these indicators exceeded expectations, indicating that the US consumer is in good health while the job market remains very tight. However, the figures for industrial and manufacturing activity disappointed expectations. 


Source:  Bloomberg, Crescat Capital

Chart #3 — 

The market revises its expectations for the Fed's key rates upwards for the first part of the year 



Following the release of better-than-expected inflation numbers and comments from Fed members that the rate hike could be extended over time, the market has revised upwards its expectations for the path of the policy rate in the coming months. 

The market now anticipates a 25 basis point increase in March, 25 basis points in May, 25 basis points in June and a pause thereafter. The market expects rate cuts to begin in December 2023 and continue into 2024.


Source: Charlie Bilello

Chart #4 — 

Hedge funds cover their short positions in technology stocks 




Over the past 12 days, we have seen the largest hedge fund short covering of technology stocks in history (excluding January 2021). These trades have supported the technology sector since the beginning of the year. Now that hedge funds have covered their shorts, will the sector go back to underperforming? 


Source: Florian Kronawitter

Chart #5 — 

The comeback of retail investors   





Hedge funds are not the only investors to have supported the equity markets since the beginning of the year. In fact, individuals have injected a record $1.5 billion per day into the US stock market in 2023.  


Source: Bloomberg, Vanda Track

Chart #6 — 

Huge trading volumes in Tesla stock 





Volume on Tesla stock - favored by retail investors - has reached staggering amounts since the beginning of the year. There is more volume on Tesla than the 6 most traded stocks after Tesla and more than double the volume on the SPDR ETF ($SPY). At the current pace, more than $6 billion worth of Tesla shares could be traded this year.


Source: Bloomberg

Chart #7 — 

The United States is on track to increase its debt by $19 trillion over the next 10 years   






Congressional Budget Office projections released Wednesday suggest that rising interest rates and bipartisan spending bills will make budget deficits worse.

The U.S. is on track to add nearly $19 trillion to its national debt over the next decade, $3 trillion more than expected, due to rising costs for interest payments, veterans' health care, retiree benefits and the military, the Congressional Budget Office said Wednesday. 


Source:  Compounding Quality


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