It is bittersweet to be consistently and categorically stopped out of a short hedge on a portfolio to the point where re-hedging begins to become a debating point: but it seems that unusually wide margins are being used to interpret US macro data (including today’s) such that optimism and liquidity consistently carry the day.

With core inflation being the focus of Federal Reserve attention the proof of this economic & market miracle will be in the eating of the next quarter’s PCE, CPI and variants thereof numbers. Why next quarter?

Exhibit 1: US Core CPI vs Capacity utilization. Again.

By end September sentiment might well have changed along with investment returns expectations.

Or maybe this time it’s truly different and the fuddy-duddy cautious crowd just refuses to see the Good Thing before it.

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