Chief Investment Officer
Summary: China will lead world in 2021 - our credit impulse is clear. A steep increase in activity is expected. The market has no price discovery, hence no "real inflation" information. The measured financial market inflation will come late and seriously lagged.
I feel strongly established macro analysts are looking at macro drivers the wrong way. The financial market operates under no price discovery. The logical conclusion to that is that any financial derivates information has zero value!
The inflation gauges like 5y5y swap and other inflation links are invalid, similar to any analyst using value investment based on psychical asset world. Global stocks today are 80% immaterial value + 20% ESG narrative. Similar inflation today is 80% deficits in supply-demand lines and 20% last mile costs which is exploding as we speak. (@Peter Garnry will publish detail analysis of last mile today – he sees reporting of 60% increase in last mile cost, which of course sits in excess of even the stellar YoY increase these platforms has done in the COVID19 crisis).
This leads me to this conclusion:
Two charts in this batch:
The end of the road
Emboldened by surging crude oil prices, Saudi Arabia makes waves on the international stage, as Crown Prince Mohammed bin Salman manages to create a World Champions League, after buying the UEFA Champion League franchise.
As the world embraces GLP-1 obesity wonder drugs, the people next in line to get a prescription stop caring about dieting and exercising, figuring that the drug will later solve all of their weight-related health problems.
With the US budget deficit spiraling above 10% of the GDP, the government is desperate to foster demand for US Treasuries. Under intense pressure from the White House, Congress makes income from government bonds tax-free.
After a criminal group deploys the most deceptive AI deepfake ever seen, generative AI becomes a national security threat. With public distrust soaring, governments crack down with harsh new laws, puncturing the AI hype.
To fix the divergence in the global trade and financial system, the largest deficit countries unite to negotiate new world trade terms. For surplus countries, the reset of the global economic model is a painful adjustment.
As discontent with Biden and Trump rises to fever pitch, Robert F. Kennedy Jr sees his support rising inexorably in the polls. On November 5, Kennedy wins the US presidential election, ushering in a new era in US politics.
Stepping up Japan's economic transformation in 2024, PM Kishida brings in a host of populist policies to boost domestic demand. As the GDP growth rate hits 7%, the BoJ is forced to abandons its yield curve control policy.
As people wake up to how little tax Europe’s billionaires are actually paying, the EU Commission implements a wealth tax of 2%. The tax sends shockwaves through Europe's luxury industry, with luxury giant LVMH plunging 40%.
