U.S. interest payments equal military spending for the first time in 3 decades (~1.9 Trillion combined)
Source: Barchart, FRED
One of the reasons we are not in recession yet. Despite rate hikes US corporate net interest payments are going down so far👇
Source: Michel A. Arouet
Over 80% of all US money created (US Dollars printed) took place between 2020 and 2023
Source: Win Smart
The sp500 P/E ratio used to be tightly correlated to the US 2 year yield (inverted on the chart), i.e the lower the 2 year yield, the higher the P/E ratio and vice versa
Well, this is no longer the case as a giant crocodile jaw has been forming. Which of the 2 will bind firts? Source. Jeroen Blokland, True Insights
With a supply deficit of more than 2.5mn barrels a day through Q4, it is probable that Biden administration will not draw on the SPR so far ahead of the actual election date
Especially given the fact that SPR (Strategic Petroleum Reserve) are already running low. It seems more plausible that Joe Biden will concentrate the SPR ammunition around Q2-Q4 next year. This creates another supply risk in the short-run for the oil market Source: Andreas Steno
One key development of the week (beyond brent hitting $90) has been stronger than expected macroeconomic data - e.g the ISM services (see data table below from Markets & Mayhem)
Indeed what we are seeing in the last ISM Services PMI reading may not be the best news for the inflation situation: 1) New orders growing faster 2) Employment growing faster (from being nearly flat m/m) 3) Prices rising faster And the market reaction - stocks pulling back - means that good macro news is bad news for the market again. Indeed, while a growing economy supports rising corporate profits (which is a positive), a too strong economy would imply a more hawkish FED than it is currently anticipated by the market.
Hard landing - Energy leads. Soft landing - energy lags. What will be the message from Mr Market?
Source chart: 3Fourteen, Warren Pies
Nearshoring / Friendshoring in action... For the 1st time since 2003, the US is importing more from Mexico than from China
Source: BofA, Bloomberg
