(1) September FOMC Preview: Struggling To Enhance Their Extreme Dovish Stance (3 min read) Dominique Dwor-Frecaut and George Goncalves team up for a guide on what to expect from tomorrow’s FOMC decision. The shift to AIT will be the prime focus.
(2) What Are The Forecasts for a Trump win? (1 min read) For our latest analysis on the US election I track undecided votes across key swing states. Biden is performing well with his lead on par with the number of undecideds. In 2016, Clinton’s lead at this stage was far smaller than the number of undecideds.
(Bilal Hafeez │ 15th September, 2020)
Lop-sided Chinese recovery (Twitter, 3 min read) Michael Pettis remains pessimistic on China despite the recent upbeat data. Faster growth in IP relative to consumption may cause a slowdown in growth due to unsustainable debt levels. Beijing should focus more on improving domestic demand rather than pushing supply-side policies [Bearish CNY]
Follow Buffett into Japan (WisdomTree, 4 min read) Japanese general trading firms offer cheap valuation, attractive dividend yield, and provide an inflation hedge which is why Buffett is now investing. As dominant deal makers investors can also gain exposure to innovative Asian start-ups.
Issues arising from the new ‘Powell doctrine’ (Vox EU, 6 min read) Economist Ignazio Angeloni points out that AIT assumes past inflation gaps may alter expectations. Still, there is no evidence that expectations are backwards-looking. The framework is asymmetric too- ‘shortfalls of employment are corrected, excesses are not’. Likewise, the new framework will be abandoned if deflation risk goes away making the framework time-inconsistent.
Should I be worried about the market sell-off? (JPAM, 2 min read) JP sees stable credit spreads and unchanged earnings outlook as a signal that the risk in US equities is limited. Recent price action may have been technical due to extended positioning and valuations. They remain bullish on structural trends supporting technology and growth stocks. [Bullish US Equities]
The Influence of OPEC+ On Oil Prices (ECB, 19 page read) Crude oil prices have been particularly volatile in recent years. Do oil producers, such as OPEC and Russia, still have power over international prices? Evidence suggests that they do not. [Bearish Oil]
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