Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
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: