I’ve been sitting on this project for a while, but I’m finally ready to bring it above the fold. I’ve long wanted a straightforward overview of global debt levels—both public and private—and an easy way to compare them across countries, alongside their respective external dynamics. This is essential material for macro investors and researchers, yet it’s rare to find all the relevant information compiled in one place. The AS global debt chartbook is a first attempt at this. Like the LEI Chartbook, this project runs on Python code generated and compiled with the help of my trusty OpenAI assistant, with a few manual adjustments along the way. At the moment, it draws data from an Excel spreadsheet, but integrating APIs should be relatively straightforward down the line.
Read MoreGlobal leading indicators were stabilizing midway through Q2, exposing the tension between macroeconomic forecasts—many of which still anticipate a significant slowdown in the second half of the year—and incoming data and market signals that suggest the trade wars, or at least the most deleterious effect of this threat, are a thing of the past. The White House will bluster, but is likely to avoid imposing growth- or market-damaging policies on a sustained basis. Underlying this assumption is the expectation that the U.S. administration will not jeopardize the privileges conferred by issuing the world’s dominant reserve currency and commanding the deepest and most liquid capital markets globally.
Read MoreAs I emerge relaxed, and slightly sunburnt, from a week on Ibiza’s still-balmy beaches, I am met with news that the world is going to hell, in a hurry. The dreadful September PMIs, and the soggy ISM headlines in the U.S., seem to have been the key catalyst for a reversal in sentiment. These data appear to have crystalised two bearish stories for markets. First, the trade wars are now a serious issue for the global and U.S. economy, and Mr. Trump either won’t, or doesn’t have the ability, to de-escalate the stand-off. At the very least, the assumption that the White House will be forced to blink into the next year’s election is now under threat. It is now just as likely that the U.S. president will double down on the conflict as a strategy to seek re-election. Secondly, the otherwise resilient consumer and services sectors are now infected by the slowdown in manufacturing and trade. Taken together these points translate rather obviously into a rising threat of a global slowdown, or even a recession. I can’t refute the fact that these two claims are looking increasingly, and worryingly, accurate. For starters, the data clearly are deteriorating, with the most recent alarm bells coming from the hitherto solid U.S. economy.
Read MoreOne great quarter down, only three to go to wash away the horror show of 2018. The portfolio did well, though it is still bogged down by a number of single names which are beginning to look a lot like value traps, of the nastiest kind. I am, as ever, optimistic about redemption in coming quarters, but I fear that the retired Macro Man, a.k.a. Bloomberg strategist Cameron Crise, is right when he says that; “the sobering reality for asset allocators is that the returns of balanced portfolios are going to struggle mightily to approach anything like 1Q performance.” It won’t be as easy for punters from here on in, but they’ll do their best. Bond markets have taken centre stage in recent weeks, aided and abetted by significant dovish shifts in the communication by both ECB and the Fed. The result has been a heart-warming rally in both front-end and long-end fixed income, or a pain trade if you’ve been short, and the U.S. yield curve showing further signs of inversion. The 2s5s went a while a ago and now the 3m/10s is gone too, which, apparently, is a big thing. As per usual, economists and strategists are squabbling on the significance of this price action, and I doubt that I’ll be able to settle anything here, so I will stick with the grand narratives, which are tricky enough.
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