Macro Digest: US growth on route to ZERO growth Q0Q by end of 2015

 

Four interesting charts as market continues to think Q1 is merely weather (ignoring that "hard winter was only East Coast of US – which is roughly 20% of US economy!)

 

 

This is NACM credit extended from National Association of Credit Management – I have taken data annualized change and made it lead by six month (avg. credit to impact lead-lag) – and then plotted it vs. 10 YR generic yield

 

Source for data: : http://web.nacm.org/CMI/PDF/CMIcurrent.pdf

 

 

 

Ran my St. Lois Fed charts – found this "new break of trend" surprising…

 

 

 

 

 

Atlanta FED GDPnow ("real time" GDP tracker) is going from bad to worse…..

 

 

 

Old one but… Albert's chart is still valid – there IS connection btw economy and profit despite denial from Wall Street…

 

 

 

 

 

Strategy:

 

Following my own advice: 

 

 

 

 

Move to "cash = US 10YR +30YR + TIP) – Take six month "off" (except six month off for me means more travel – Slovenia+ Croatia this week and Singapore + Kazakhstan next week)

 

85% in FI now – up from 75% (reduce equity to 15% overall mainly)

 

MACRO CALLS:

 

-      2015 is lost year for recovery in macro, but micro economy will improve and set-up 2016H2 recovery

-      FED will hike in 2015. Not due to economics but as margin call on asset inflation (I have 40-60 on June/September)

-      US dollar will hit 1.00 vs. the EUR on shortage of US funding (which will be major buying opportunity)

-      EMG + China will hit low in economic growth this year on stronger US dollar and lower commodities setting up biggest discount in decades.

-      Stock market has 10% more upside vs. 30% downside. Expected return in 3,5,7 years is exactly ZERO & I have company from one of the best in industry: Druckenmiller http://www.bloomberg.com/news/articles/2015-04-10/druckenmiller-recounting-soros-experiences-blasts-fed-policies

 

 

Safe travels,

 

 

Steen Jakobsen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

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