Head of Research and Global Chief Strategist, Steno Research

Andreas Steno

Head of Research and Global Chief Strategist

Macro and Geopolitical Research House

Steno Research

Steno Research is a new macro and geopolitical research house. We are based out of Copenhagen, Denmark, but have an international team and a strong network of sources and partners around the world. The team is lead by Andreas Steno, previous global head of strategy at Nordea Bank, and Mikkel Rosenvold, former chief consultant in the Danish Ministry of Finance.

Cross Asset Strategy

<ul><li>Happy Sunday from frosty Copenhagen and welcome to our flagship editorial! The underlying demand trends are not strong.</li><li>Running credit card data has been weak in October/November, the credit impulse is worsening and there are signs of actual labour market softening around the otherwise sticky service sectors in the West, yet markets are partying like there is no tomorrow.</li><li>What is causing this disconnect and could it continue into the year-end?</li></ul>

Happy Sunday from frosty Copenhagen and welcome to our flagship editorial! The underlying demand trends are not strong.Running credit card data has been weak in October/November, the credit impulse is worsening and there are signs of actual labour market softening around the otherwise sticky service sectors in the West, yet markets are partying like there is no tomorrow.What is causing this disconnect and could it continue into the year-end?

Steno Signals #76: The Fed Has Lost Control of Liquidity Trends

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Macroeconomics

<ul>
<li>US financial markets have become fixated with the timing of interest rate cuts by the Fed, but the arrival of economic weakness does not necessarily guarantee easier monetary policy settings.</li>
<li>The importance of spending on services has risen over the past four decades and price stickiness displayed for this component of inflation could repeat itself moving forward.</li>
<li>Price increases since 2020 Q2 have been a major factor behind the sharp recovery in profits, an outcome highly analogous to the inflationary 1970s, involving consequences for equity valuations.</li>
</ul>


US financial markets have become fixated with the timing of interest rate cuts by the Fed, but the arrival of economic weakness does not necessarily guarantee easier monetary policy settings.
The importance of spending on services has risen over the past four decades and price stickiness displayed for this component of inflation could repeat itself moving forward.
Price increases since 2020 Q2 have been a major factor behind the sharp recovery in profits, an outcome highly analogous to the inflationary 1970s, involving consequences for equity valuations.


US Financial Markets Embrace a Fed Policy Pivot as Another Game of Chicken Looms Large

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Over the past year Gold bugs have not had it easy. While it was a brilliant performer for much of 2020, it is still negative so far this year.A few reasons explain this lack of performance. Firstly, yields have had a two-way street, both nominal and, more importantly, real yields. Yields were initially up at the beginning of the year and then generally down since March. Secondly, there has not been a clear trend on the USD – something that Gold has typically been inversely correlated to. The USD has spent as much time this year rising as it has falling and, depending on how it is measured, it is effectively unchanged to marginally up. The third reason is the emergence of Bitcoin as a viable alternative or addition to other hard assets. Whether one agrees or disagrees about Bitcoin being a serious so called ‘hard’ asset, it is increasingly being seen as such, which has played its role in taking some of the shine off Gold. However, are we approaching an interesting juncture in all three of these corners? We can all see that inflation has started to rise and serious questions are being raised about whether higher prices are short lived &amp; transitory or longer lasting. As a consequence, breakevens have risen faster than nominal yields thus leaving key benchmarks of ‘real’ yields deeper in negative territory. That is beginning to be bullish for Gold again.At the same time, the bounce in the USD has started to lose momentum and there are some signs that it may trend down, at least in some corners. Asian markets look particularly attractive as the continent makes its way forward to some form of normality – something that North America and Europe had already started to do much earlier. For those who may not be familiar, as an example, the environment in which I sit in Singapore still requires one to wear a mask, be in a group of no more than 2, not talk on the train and, enjoy one’s outing without music in venues such as restaurants, bars, cafes etc. There is a long way to go for normality to return to many parts of Asia but it is approaching and as it does, the demand which has been pent up for 2 years will start to show its various colours. Thus, the ADXY Index looks bullish. If anything, a lower USD would support Gold.Finally, there is the strange market of the bitcoin. It doubled, then halved, then doubled again all in the space of 10 months. It is now a market truly driven by feelings and sentiments. Interesting it might be then that the recent high was when the much-anticipated futures ETFs went live last week. So far (and it is very early) it appears to look like a classic “buy the rumour, sell the fact” scenario. What needs to be seen is whether that will be short lived or longer. A slowdown in the rally, a consolidation or a move down in bitcoin would likely be a bullish sign for Gold.Below we look at the price action and setups on all these markets, which should be watched closely while building either a case for, or against, the real hard asset that is Gold.We start with an index that attempts to encompass all three components - real yields, the USD, &amp; Bitcoin…

Over the past year Gold bugs have not had it easy. While it was a brilliant performer for much of 2020, it is still negative so far this year.A few reasons explain this lack of performance. Firstly, yields have had a two-way street, both nominal and, more importantly, real yields. Yields were initially up at the beginning of the year and then generally down since March. Secondly, there has not been a clear trend on the USD – something that Gold has typically been inversely correlated to. The USD has spent as much time this year rising as it has falling and, depending on how it is measured, it is effectively unchanged to marginally up. The third reason is the emergence of Bitcoin as a viable alternative or addition to other hard assets. Whether one agrees or disagrees about Bitcoin being a serious so called ‘hard’ asset, it is increasingly being seen as such, which has played its role in taking some of the shine off Gold. However, are we approaching an interesting juncture in all three of these corners? We can all see that inflation has started to rise and serious questions are being raised about whether higher prices are short lived &amp; transitory or longer lasting. As a consequence, breakevens have risen faster than nominal yields thus leaving key benchmarks of ‘real’ yields deeper in negative territory. That is beginning to be bullish for Gold again.At the same time, the bounce in the USD has started to lose momentum and there are some signs that it may trend down, at least in some corners. Asian markets look particularly attractive as the continent makes its way forward to some form of normality – something that North America and Europe had already started to do much earlier. For those who may not be familiar, as an example, the environment in which I sit in Singapore still requires one to wear a mask, be in a group of no more than 2, not talk on the train and, enjoy one’s outing without music in venues such as restaurants, bars, cafes etc. There is a long way to go for normality to return to many parts of Asia but it is approaching and as it does, the demand which has been pent up for 2 years will start to show its various colours. Thus, the ADXY Index looks bullish. If anything, a lower USD would support Gold.Finally, there is the strange market of the bitcoin. It doubled, then halved, then doubled again all in the space of 10 months. It is now a market truly driven by feelings and sentiments. Interesting it might be then that the recent high was when the much-anticipated futures ETFs went live last week. So far (and it is very early) it appears to look like a classic “buy the rumour, sell the fact” scenario. What needs to be seen is whether that will be short lived or longer. A slowdown in the rally, a consolidation or a move down in bitcoin would likely be a bullish sign for Gold.Below we look at the price action and setups on all these markets, which should be watched closely while building either a case for, or against, the real hard asset that is Gold.We start with an index that attempts to encompass all three components - real yields, the USD, &amp; Bitcoin…

Managing Director

Elan Gore

TMI Data Science

TMI Data Science utilizes Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade & traditional media.  Our proprietary software, TMI Machine, is a text-mining platform designed with the buy-side & capital markets professional in mind, text-mining the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income & individual equities.  TMI provides custom leading indicators and systematic trading strategies, operating at the nexus of linguistics & statistics drawing on vast experience in investment banking and hedge fund settings in senior quantitative and fundamental roles.  

TMI Data Science was founded by Elan Gore, an award-winning Senior Global Basic Materials Equity Analyst & China Economist with 15 years of experience in North American hedge funds & institutional managers; and Alessandro Porrino, Ph.D., an Algorithmic Trading Analyst and Programmer with 10 years of front-office experience ranging from complex FX option pricing to auto-hedging strategies at Bank of America Merrill Lynch and Standard Chartered.  Mr. Gore holds an MBA in Finance from New York University Stern School of Business, and Mr. Porrino holds a Ph.D. in Systems Engineering from Brunel University London.

<ul>
<li>In a New York Times Op-Ed (<a href="https://www.nytimes.com/2021/08/19/opinion/biden-afghanistan-johnson.html" target="_blank" rel="noopener">"To Save His Presidency, Biden Must Tell the Truth About Afghanistan"</a>, August 19) historian and Georgetown University professor Michael Kazin suggests that "the president and his fellow Democrats face a political environment so daunting that even the slightest disruption could derail their domestic agenda"; Kazin draws an analogy to LBJ as "the last time a war blew up in the face of a Democratic president, it derailed his domestic agenda and stalled the most ambitious social reforms of a generation"</li>
<li>We employ text mining to characterize negative media coverage of Biden in the context of the Afghanistan withdrawal, along with other metrics offering clues on potential damage from a week of turbulence in American foreign policy</li>
<li>While the volume of negative coverage in the Conservative media is significantly larger, once we normalize the data it becomes apparent that outrage over the Afghanistan withdrawal is anomalously high on both sides of the aisle</li>
<li>We recognize links between the Afghanistan withdrawal and progress on domestic policy are unlikely to be apparent, as the fate of the budget resolution and infrastructure bill lies solely in the hands of the Democratic Party, and any overt attempt by moderate/centrist Democrats to capitalize on plunging presidential approval in the aftermath of the withdrawal would not be received well</li>
<li>The key indicator of incremental dissent in the Democratic Party remains the actions of Senators Joe Manchin and Kyrsten Sinema, who have already established themselves as thorns in their party's side and are potentially emboldened by recent events to oppose the progressive elements of Biden's agenda more forcefully</li>
<li>Challenges to Biden's domestic agenda could have significant market implications given the inflationary impact of infrastructure and social spending packages, as well as positioning in infrastructure equities; in fact, the quantum of negative Biden coverage in the Liberal media has been quite strongly correlated with a number of cyclical themes as we illustrate below</li>
</ul><div class="content-highlight">TMI Data Science utilizes text mining and Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. </div>


In a New York Times Op-Ed ("To Save His Presidency, Biden Must Tell the Truth About Afghanistan", August 19) historian and Georgetown University professor Michael Kazin suggests that "the president and his fellow Democrats face a political environment so daunting that even the slightest disruption could derail their domestic agenda"; Kazin draws an analogy to LBJ as "the last time a war blew up in the face of a Democratic president, it derailed his domestic agenda and stalled the most ambitious social reforms of a generation"
We employ text mining to characterize negative media coverage of Biden in the context of the Afghanistan withdrawal, along with other metrics offering clues on potential damage from a week of turbulence in American foreign policy
While the volume of negative coverage in the Conservative media is significantly larger, once we normalize the data it becomes apparent that outrage over the Afghanistan withdrawal is anomalously high on both sides of the aisle
We recognize links between the Afghanistan withdrawal and progress on domestic policy are unlikely to be apparent, as the fate of the budget resolution and infrastructure bill lies solely in the hands of the Democratic Party, and any overt attempt by moderate/centrist Democrats to capitalize on plunging presidential approval in the aftermath of the withdrawal would not be received well
The key indicator of incremental dissent in the Democratic Party remains the actions of Senators Joe Manchin and Kyrsten Sinema, who have already established themselves as thorns in their party's side and are potentially emboldened by recent events to oppose the progressive elements of Biden's agenda more forcefully
Challenges to Biden's domestic agenda could have significant market implications given the inflationary impact of infrastructure and social spending packages, as well as positioning in infrastructure equities; in fact, the quantum of negative Biden coverage in the Liberal media has been quite strongly correlated with a number of cyclical themes as we illustrate below
TMI Data Science utilizes text mining and Natural Language Processing to build custom leading indicators using unstructured data sourced from the global financial, trade &amp; traditional media. Our proprietary tools text-mine the global media to discern and quantify nuanced qualitative shifts in press coverage as they apply to macroeconomics, equity indexes/ETFs, commodities, currencies, fixed income &amp; individual equities. 

TMI Snapshot:  Will the Afghanistan Fiasco Harm Biden's Domestic Agenda?

Cross market developments over the past week point to real yields moving deeper into negative territory in the US. The combination of higher commodity prices, a break higher on breakevens and and anchored nominal yields will likely result in support for hard assets like Gold and Real Estate, both of which are looking more interesting

Cross market developments over the past week point to real yields moving deeper into negative territory in the US. The combination of higher commodity prices, a break higher on breakevens and and anchored nominal yields will likely result in support for hard assets like Gold and Real Estate, both of which are looking more interesting

Real Yields - Focus Again on Hard Assets?

US Breakeven 10 Year (USGGBE10 INDEX)

Steno Signals #76: The Fed Has Lost Control of Liquidity Trends

It seems like the narrative lags the actual price action. 2024 estimates/outlooks are turning upbeat, while positioning is one way traffic towards...

Steno Research

US Financial Markets Embrace a Fed Policy Pivot as Another Game of Chicken Looms Large

Markets are betting that the Fed will soon pivot towards a dovish stance. Service inflation inertia will determine the outcome. Rising inflation...

DeSaque Macro Research

The Renewed Case for Gold

The components that seem to impact the Gold price the most are beginning to show signs that we could see higher levels on Gold over the coming weeks.

Shyam Devani

TMI Snapshot: Will the Afghanistan Fiasco Harm Biden's Domestic Agenda?

It may be difficult to link chaos in Afghanistan to domestic policy, but we are seeing some cracks in the Democratic narrative as outrage over the...

Elan Gore

Real Yields - Focus Again on Hard Assets?

US real yields continue to look likely to move deeper into negative territory allowing Gold and real estate to perform well

Shyam Devani