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Research
A whiff of reflation - Oct. G3 Leading Indicator Watch
Our cyclical roadmap: Fed has eased monetary policy into a backdrop of elevated nominal GDP. Recession is unlikely if financial conditions are loose and savings rates are falling.
US Inflation: Moderate inflation pressures
US Consumer/Manufacturing: Signs of relief + potential for an inventory re-build cycle
US Recession Risks: Recession unlikely if everyone dis-saves and financial conditions loose
US Growth: 2002-03 analog in muted jobs market alongside resilient growth
US Growth: Resilient leading indicators alongside resilient coincident growth
China: Excess liquidity tailwinds, waiting for more housing/consumer stimulus
China: Rebound continues for growth and inflation leading indicators
Eurozone: Consensus too optimistic on disinflation
Eurozone: Leading indicator improvement broadening, but structural issues remain
Opportunistic long VIX to hedge risk asset exposures
The old saying in risk management: buy protection when you can, not when you have to.
We’ve been intentionally opportunistic in flagging when the volatility market presents attractive risk-reward opportunities to add long vol exposure. Today, our indicators once again signal a favorable tactical setup to go long volatility.
Our tactical “complacency” signal has triggered again for US equities. US single-stock implied volatility is now very elevated relative to the S&P index volatility.
Global Macro Update: Fed cut roadmap playing out, adjusting our top ideas
Our “buy the rumor, sell the fact” playbook around the September Fed meeting is playing out, where the Fed cut marks a tradeable low in yields and the USD while ultimately supporting further equity gains.
In the very short-term, we like adding tactical long VIX position amid signs of complacency. In light of this, and given some big price moves over the past week, we are narrowing our focus:
Take profit on long CADJPY
Take profit on Long INDA
Close flat PnL on short CNHINR
Change UK rates recession trade