Eurizon SLJ Capital

In this edition of "The Long & Short," Neil Staines explores our contrarian post-election views and the Bank of England narrative: ◻️ Markets are overestimating U.S. #growth prospects and underestimating Europe's, despite rising #volatility and geopolitical risks. ◻️ Market anticipation of inflationary #Trump policies may be misplaced; we expect growth moderation and continued #disinflation in the U.S. ◻️ Contrary to expectations of unchecked #fiscal expansion, the Trump administration may focus on spending cuts and fiscal consolidation. ◻️ The Bank of England’s cautious inflation forecast emphasises near-term rate cuts, despite fiscal pressures and #global uncertainties. ◻️ Tighter financial conditions, underestimated by Bank of England models, hint at the potential for more rate cuts if current market trends persist. #macroeconomics #bonds #equities #investing #wealthmanagement #dollar #dollarsmile

In this edition of "The Long & Short", Neil Staines explores the evolving landscape of central bank strategies, U.S.-Europe economic divergence, and heightened market volatility as geopolitical and election-driven uncertainties shape investor sentiment: ◻️ ECB Rate Strategy: The ECB’s stance on gradual rate cuts will likely reflect caution. Market expectations of European and U.S. #markets highlight a divergence that may be unsustainable. ◻️ U.S. #Employment and #Economic #Growth: Revised U.S. payroll data challenges overly optimistic economic assumptions, suggesting markets may underestimate #European growth while overestimating U.S. #growth potential. ◻️ #Volatility and U.S. Election Impact: Elevated #volatility premiums around the U.S. #election reflect uncertainties; market pricing for a Trump presidency assumes a steeper #yield curve, but the actual inflationary impact remains debatable. ◻️ #Equity #Market #Risks: While the macro backdrop remains supportive for risk assets, #consumer demand concerns are emerging, casting doubt on future growth projections and the strength of the equity market’s trajectory. #macroeconomics #investing #bonds #dollar #dollarsmile

In this edition of "The Long & Short", Neil Staines explores how shifting policies and contrasting economic signals shape the outlook for U.S. and eurozone growth: ◻️ Markets are pricing in the potential impact of a second #Trump presidency, expecting trade tensions and fiscal stimulus to drive inflation and growth. ◻️ Eurozone resilience is understated, with factors like household spending, low #unemployment, and wage bargaining potentially supporting demand more than rate-cut projections suggest. ◻️ ECB policymakers show mixed views on policy adjustments, reflecting uncertainty about economic recovery signals. ◻️ U.S. markets anticipate fewer rate cuts for 2024, spurred by strong payroll data, but #ECB rate cuts remain priced in despite a moderate economic outlook. ◻️ The expected U.S.-Europe #economic divergence may be overblown, with growth likely converging through 2025 due to various supporting factors on both sides. #macreconomics #investing #bonds #equities

In this edition of "The Long & Short", Neil Staines explores market volatility, the ECB and geopolitical risks: ◻️ Geopolitical risks, like the Middle East conflict, may increase market #volatility, affecting equities, bonds, and the dollar. ◻️ #Markets are pricing in higher #yields and a stronger dollar with the potential for a second Trump presidency, but medium-term impacts are unclear. ◻️ The #ECB cut rates, highlighting progress in reducing inflation, but remains data-dependent without clear future guidance. ◻️ Eurozone demand #growth looks positive, with resilient household spending, low #unemployment, and wage pressures. ◻️ Market volatility will likely stay elevated next week due to central bank updates, geopolitical events, and corporate #earnings ahead of U.S. elections. #macroeconomics #investing #equities #bonds

In this edition of "The Long & Short", Neil Staines explores Central Bank actions, labour market shifts, and rising geopolitical risks: ◻️ Despite current market pessimism, European #growth may rebound due to factors like China's stimulus and NGEU funds, with the #eurozone potentially outperforming the U.S.   ◻️ The Fed is increasingly confident that #inflation risks have diminished, and the labour market cooling supports a dovish stance, potentially leading to further rate cuts.   ◻️ The Fed acknowledges challenges in interpreting labour market data and stresses that recent rate cuts are not indicative of a worsening economic outlook, though #risks of over-slowing the #economy remain.   ◻️ #Geopolitical risks, particularly in the Middle East, add to market volatility, increasing the probability of extreme outcomes (kurtosis) in financial markets. However, the core #macro #outlook for risk assets remains positive. #macroeconomics #investing #bonds #equities #China #growth #wealthmanagement #podcast

In this edition of "The Long & Short", Neil Staines explores developed market Central Bank action and the growth implications of China's recent policy shifts: ◻️ Chinese policy pivot has sparked a notable equity rally, but global attention is shifting back to developed markets during China’s Golden Week. ◻️ Central bank rhetoric in #Europe, #UK, and the #US highlights a shift towards bearish rate curve developments, with China’s policy activism providing a supportive backdrop for #global #growth. ◻️ The Fed's recent actions, including the 50bp rate cut, reinforce confidence in a soft landing and diminishing #inflation risks, while risk assets benefit from this dovish stance. ◻️ Weak CPI and PMI data in Europe led to rate repricing, but potential Chinese growth could significantly boost German and European economic prospects. ◻️ The UK's fiscal trajectory, influenced by an upcoming budget, is expected to lead to more dovish actions from the BoE, potentially bringing aggressive rate cuts. ◻️ Combined dovishness from DM central banks and positive developments in #China contribute to a "Goldilocks" environment for global equities, characterized by disinflation and moderate growth. #macroeconomics #investing #bonds #equities

In this edition of "The Long & Short", Neil Staines explores China's stimulus, the Fed, Europe and the Bank of England. It's quite a Journey: ◻️ The surprise 50bp cut by the Fed signals a dovish pivot, increasing the likelihood of further rate cuts from the ECB and BoE in the coming months. ◻️ The Fed's actions reinforce the narrative of continued disinflation and growth moderation, increasing the probability of a soft landing and supporting risk assets. ◻️ China's recent dual policy pivots, including liquidity and fiscal expansion measures, mark a significant effort to boost domestic demand, with global economic implications. ◻️ The combination of Fed rate cuts and China's stimulus enhances the positive outlook for risk assets and global growth, particularly benefiting markets like Germany and emerging economies. #macroeconomics #investing #bonds #equities #wealthmanagement

In this edition of "The Long & Short", Neil Staines explores the Fed's rate cut, their narrative and implications for markets. ◻ Surprise 50bps Rate Cut: The Federal Reserve delivered an unexpected 50bps rate cut, setting the target range at 4.75% – 5.00%, marking a dovish shift in monetary policy. ◻ Inflation Confidence: The Fed expressed greater confidence in moving inflation toward the 2% target, with balanced risks to both its employment and inflation mandates. ◻ Front-Loaded Rate Cuts: The updated Fed "dots" revealed that rate cuts would be front-loaded, with 100bps projected cuts in 2024, followed by additional cuts in 2025 and 2026, bringing the rate down to the long-term equilibrium rate of 2.75%. ◻ Data-Driven Decisions: Fed Chair Powell emphasised that future rate decisions will be made on a meeting-by-meeting basis, dependent on employment and inflation data, signaling no rush to ease monetary policy aggressively. ◻ Global Impact on Other Central Banks: The Fed’s actions increase the likelihood of rate cuts from the ECB and Bank of England, with growing expectations for a 50bps cut from the BoE in November and potential moves from the ECB. #macroeconomics #investing #bonds #equities #dollar #federalreserve #wealthmanagement

As global economic conditions shift, Neil Staines explores the key trends shaping markets, from central bank decisions to the outlook for the US dollar. ◻ The USD is vulnerable to a deeper correction, with disinflation and growth moderation driving macro conditions. ◻ The ECB's 25 bps rate cut brought no new guidance, maintaining a cautious, data-dependent approach. ◻ ECB President Lagarde reiterated the importance of data, keeping October rate cut prospects on the table. ◻ The Draghi report pushes for structural investment in the eurozone via joint liability debt issuance, seeking a long-term strategy for competitiveness. ◻ USD weakness could accelerate due to hedge ratio adjustments, while macro settings support elevated volatility and a soft landing for the US. #macroeconomics #investing #dollar #inflation #growth #disinflation #wealthmanagement #oasis

Neil Staines is back with thoughts on the Fed's shifting priorities, potential dollar depreciation, and the economic outlook following the Jackson Hole Symposium. ◻ July Policy Meeting Summary: Fed shifted focus, emphasizing reduced inflation risks and increased employment risks. ◻ Powell’s Inflation Stance: The Fed plans to cut rates before reaching the 2% inflation target, with unemployment already above their forecast. ◻ Dollar Outlook: Twin deficits, USD overvaluation, and growth moderation point to a potential significant USD depreciation. ◻ Jackson Hole Highlights: Powell's dovish tone highlighted inflation under control and focus on employment. ◻ Data Dependence: Recent data shows modest labour market loosening, reduced inflation risks, and no immediate recession signs. ◻ Forward Guidance: Analysts revise dollar forecasts downward, with increased attention on the August employment report. ◻ Macro View: Expecting disinflation, no near-term recession, and higher market volatility, but anticipate a soft US landing. #macroeconomics #investing #dollar #dollarsmile #bonds #equities #commodities #wealthmanagement