Macro Digest: Three reasons why end of this 1st bear cycle could end by April 2nd
Chief Investment Officer
Summary: This first bear cycle could end by April 2nd - we state three reasons why
Japan Year-end is March 30th – Japan is single biggest buyer of credit and carry. Appetite disappeared early in February, but “should” be back April 2nd.
I have ZERO doubt that year end + volatility has ended RISK appetite for Japan Institutional money. Japanese investors are major investors in all credit products but in particular in CLO type structure.
One way to monitor “stress induced” on Japan and its funding of US assets is through the USDJPY basis swap:
We have had four major forces collapse:
- Global Supply Chain
- Global Demand
- Global Energy
- Global Yield enhancement from Japanese Institutions
I expect SIGNIFICANT improvement in credit and credit tranches post March end.
For my money - April 1st is more than April’s fool day, it’s also start of some sort of normalization. Year End is massive event in Japan. Make no mistake.
UK Office of Budget Responsibility via Chair Robert Choat “gets it” - what is needed – This is 1st CLEAR voice and note from whom!
“When a fire is large enough you just spray water and worry about it later”
Less potent, less credible but interesting. The GDX – miners ETF was 1st to turn in 2008 – and now its up 57% of its low @ 16.18$
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.