9 Charts on Quantitative Tightening

By Callum Thomas

Quantitative tightening has been running at full speed for almost 5 months now (and for a total period of 17 months since commencing in October 2017), and with QT finally coming front of mind for investors I thought it would be a good idea to update some of the charts from my previous “8 Charts on Quantitative Tightening” article (as well as a couple of new charts and indicators).

It’s also very timely to revisit this topic as the Fed has begun to get distinctly cold feet on rate hikes and QT (quantitative tightening, aka “balance sheet normalization” or “balance sheet runoff”), and speculation is growing that QT1 may get put on ice as the Fed approaches its apparent deemed ‘neutral balance sheet level’ (my term – borrowing from the neutral Fed funds interest rate level concept), or as Fed Chair Powell mentioned, the “normal balance sheet“.

Continue reading 9 Charts on Quantitative Tightening

Economic Trends, Market signals, Expected Returns

By Callum Thomas

Here’s some of the standout economic and markets charts on my radar (originally posted on LinkedIn). I aim to pick a good mix of charts covering key global macro trends, and ones which highlight risks and opportunities across asset classes.

Hope you enjoy!

1. Philly Fed Fakeout? This chart should seem familiar to regular readers, I featured the full version of it a few weeks ago in musing on whether it was a case of “Recession or Reset?” for the US economy. I show here the composite economic confidence indicator for the USA, and one component of it; the Philly Fed Index – which is a regional business survey.

There is an interesting pattern for the Philly Fed index to be somewhat manic-depressive, and it seems from first glance that sharp and extreme movements in this indicator often mark an exhaustion of the prevailing trend, i.e. a turning point.

So the implication is that this here could be is as bad as it gets for the US economy, and that the “reset theory” may win out…

 

Continue reading Economic Trends, Market signals, Expected Returns

Global Economic Pulse and Investor Sentiment

By Callum Thomas

Here’s some of the standout economic and markets charts on my radar (originally posted on LinkedIn). I aim to pick a good mix of charts covering key global macro trends, and ones which highlight risks and opportunities across asset classes.

Hope you enjoy!

1. China vs USA — Economic Pulse: This chart combines the official and Markit manufacturing PMIs for China and the US. With the latest results the standout is the slight rebound in China and drop in America.

But the bigger picture observations are

i. China is below the critical 50-point mark (growth has clearly been softening there); and

ii. the US has started to catch down to this softer growth impulse in China; and

iii. it may well be that China has to recover first before the US will likewise regain momentum.

In other words, say what you will, but the economies of China & the USA remain intimately linked.

 

  

  Continue reading Global Economic Pulse and Investor Sentiment