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Macro Risk Advisors: A cyclical bull within a secular bear

Commodity and equity cycles alternate, as history (since 1900) clearly shows in the below chart.

The rise in real and nominal yields may be pushing the equity market closer to a bear, while from a technically, commodities are looking more and more bullish. MRA argue commodities enter secular bull market in 2000. Click here for 5 min video, here for one page explainer.

Roth MKM: Late Cycle Dance: A 75-Year Study of NIPA Profits

A rapidly coalescing consensus around the “soft landing view” overlooks a key red flag provided by the GDP-based NIPA profits data, which suggests we are late in the market and economic cycle.

Roth continue to eschew high-valuation sectors and cyclical groups that would tend to weaken in a downturn. Healthcare continues to screen well.

As do Treasuries across the curve, a view that would certainly be characterized as “contrarian” given the price action YTD. Click here. 

Clocktower Group: Global assets and their relationship with China’s credit impulse

The below is one of Marko Papic’s favourite charts right now. It shows that global assets (like US 10-year) are no longer tied to the hip of Chinese credit growth. (Page 8 of report)

This is a new cycle. China matters, but its diagnosticity for bonds and commodities is a lot lower. And it’s all because of US politics he says.

China has not been diagnostic for the US Treasury market since the fateful decision by US policymakers to abandon all pretense of prudence… way back in 2017 when Trump unnecessarily stimulated the economy, late in the cycle. Click here.

Pennock Idea Hub: How the USD could sink the S&P 500

The USD has historically been inversely correlated with U.S. equity prices. A number of risks are appearing to put upward pressure on the USD. 

In addition, the possible reversal of the BoJ’s easy monetary policy, while Yen bullish and Dollar bearish, is bearish for global risk appetite. Click here.

Thomas Lam (SmartKarma): A Unique High-Frequency Indicator of Recessions

Thomas Lam is an independent economist, recently ranked in Bloomberg’s ”top 5 forecasters.”

Historically, more than seven out of ten economies globally have experienced subnormal growth around US recession episodes on average

Lam’s improved weRO indicator (methodology explained in piece), which offers a timely assessment of US recessions (updated every week), continues to hover around 65% through week-ended September 8. This is slightly down from a peak of 85% 3-months ago, but still meaningful, says Lam. Click here.