BYD continues to deliver resilient EV sales thanks to a strong model line-up, vertical integration and leadership in LFP batteries.
I don't think the Japanese central bankers can hold out any longer.
Is decline in yen due to carry trade ? Or is the market questioning the credibility of the Japanese central bank indiscriminate money printing policies.
Usd/Yen - Since I posted my bearish views of dollar / yen on 12 Apr when it was traded at 125.4 and had a target of 134 and 147 , the first target has been hit today, frankly it came sooner than I thought.
Just in case you missed this it’s just up on YouTube. Tips and tricks dropped!
Commodity super cycle typically last between 7-10 years , this cycle is 2.5 years old.
Congrats to those who invested in the commodity unit trust under my management since mid 2021 , we are outperforming every asset class. Ride this mega trend!
Inflation finally slows!
Wall Street closed sharply higher as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism that the Federal Reserve will be able to tighten monetary policy without tipping the economy into recession. Does that mean that the market has found its bottom?
In the 12 months through April, the PCE price index advanced 6.3% after jumping 6.6% in March.
The annual PCE price index increase is slowing as last year's large gains drop out of the calculation.
Excluding the volatile food and energy components, the PCE price index gained 0.3%, rising by the same margin for three straight months. The so-called core PCE price index increased 4.9% year-on-year in April, the smallest gain since last December, after rising 5.2% in March. It was the second straight month that the rate of increase in the annual core PCE price index decelerated. This inflation measure is the most followed by economists and policymakers.
Inflation past the peak?
Inflation has pass the peak but it will remain stubbornly high. I remain confident that crude oil recent consolidation is getting ready for another parabola spike up to 140 d/b.
Substantial declines in the annual rate of inflation are unlikely to materialise until there are significant improvements in geopolitical tensions (that would get energy prices lower), supply chain strains and labour market shortages. Unfortunately, there is little sign of any of this happening anytime soon – The Russia-Ukraine conflict shows no end in sight, Chinese lockdowns will continue to impact the global economy.
At the moment consumer demand is firm and businesses have pricing power, meaning that they can pass higher costs onto their customers.
Housing will keep inflation high
The housing components, accounting for more than 30% of the CPI basket, are not likely to turn lower soon. The housing market remains red hot and this feeds through into primary rents and owners’ equivalent rent (OER) components of inflation with a lag of around 12-18 months.
Rent contracts are typically only changed once a year when your contract is renewed so it takes time to feed through.
Fed under political pressure to curb inflation
This situation intensifies the pressure on the Fed to hike interest rates. This potentially means aggressive rate hikes and the risks of a marked slowdown/recession.
The Federal Reserve remains, for now at least, under political pressure to tighten with the poll this month which shows that Americans remain far more concerned about inflation than any other issue. A total of 70% of Americans view inflation as “a very big problem”
And the empirical evidence shows that the Fed in the post-Volcker era has been increasingly sensitive to such political pressures. It is certainly not easy for Fed to talk dovish when the executive and legislative arms of government want to curb inflation as a top priority especially ahead of the mid term election.
Time to start buying ? Valuation is tempting after the meltdown.
US shares took at beating with Nasdaq 100 down 30 % and S&P testing the 20% bear market benchmark. Valuation looks compelling but is it time to buy?
United States Private Consumption accounted for 68.3 % of its Nominal GDP in Mar 2022.
Shares of U.S. retailers and consumer-oriented stocks took a beating last week on worries about whether surging inflation will continue to hurt corporate bottom-lines and cause shoppers to cut back.
Last week, consumer staples dived 8.6% and consumer discretionary tumbled 7.4%, the biggest declines of any S&P 500 sectors, with inflation hammering corporate results. Shares of some companies fared far worse, with Walmart down 19.5% for the week and Target down 29% after disappointing results.
We are beginning to see Investors consumers cut spending in the face of higher prices. This is happening sooner than what most on Wall Street are anticipating .
I think we are only at the beginning of people cutting down spending and changing their spending patterns.
The latest consumer price index jumped 8.3% on an annual basis. Prices for gasoline stand more than 50% higher than a year ago, according to AAA.
Gasoline prices are scaling new high while oil prices has stubbornly stay above the 100 dollar/ barrel mark will keep undermining consumer spending.
A survey by Morgan Stanley found that more than half of consumers plan to cut spending over the next six months due to inflation.
The slump in share prices has made valuations and risk/reward more tempting but we to see evidence of ebbing inflation before we start bottom fishing .
Private consumption makes up 68 % of the US economy , when consumer cuts back spending US and the world is going into recession. This bear market has more downside , it’s not time to get into stocks yet .