All S&P 500 gains this year came from the AI boom/mania, all other stocks are flat reflecting concerns about global economic slowdown
Source: Michael A. Arouet
US government spending increased 9% over the last year while tax receipts declined 8%. What a luxury...
Source: Charlie Bilello
The top 10 companies in the S&P 500 with outstanding credit ratings
Among them, Microsoft and Johnson & Johnson stand out as the only two companies boasting the highest AAA rating. Source: Genuine Impact
European Central Bank hikes rates to a record 4% as inflation risks outweigh economic gloom.
- The ECB just raised its key rates again today, by 25bp (main Refi rate at 4.50%, deposit rate at 4.00%) - Concerns around the underlying inflation dynamic appear to have overwhelmed the ongoing negative (and concerning) dynamic in Europe’s economic growth: "inflation continues to decline but is still expected to remain too high for too long. The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. In order to reinforce progress towards its target, the Governing Council today decided to raise the three key ECB interest rates by 25 basis points." Source: Bloomberg
While Germany is deindustrializing US construction spending on manufacturing is going thru the roof. Viel glück Deutschland...
Source: Michael A. Arouet
While China has been offloading US Treasuries for 10+ years, the rate has accelerated
Both Canada and Mexico also now account for a higher % of US imports than China. These stories belong to the "new normal": the East-West divide, reshoring / nearshoring / friendshoring, etc. Source: Tavi Costa, Bloomberg, The Kobeissi Letter
Despite QT of almost 1T$, Fed net liquidity* actually increased fueling the rally in big tech
Remarkable chart from Steve Donze at Pictet Asset Management thru Michel A.Arouet. *Net liquidity is a term that refers to the amount of cash and credit available for transactions, purchases, or investments. It is calculated by adding up the money supply and the outstanding credit in a given currency or region. Source: Pictet Asset Management, Michel A.Arouet
Today is ECB day
What is the Taylor rule telling us when it comes to theoretical interest rates based on German data? Key interest rate should be at 10.9%, so 6.6% higher than current rate, according to Taylor Rule with German inflation at 6.4% & unemployment below NAIRU. Howeverm the spread between Taylor Rule rate & ECB key rate is lower than it has been since 2021. This might suggest that hike cycle could soon come to an end. Source: Bloomberg, HolgerZ
