Our core product that pulls together and explains current global macroeconomic markets. Our work provides actionable insight into the global economy. We are heavy graphics users to illustrate concepts and, in some cases, show the direction of a trend. The MI2 Trader / Chart Point pieces are trade focused complements to MI2 Reports written with a call to action based on current market activity. This piece seeks to take the macroeconomic framework and shed light on certain assets.
Analysis of flow and sentiment evidence is an important part of our “Trader” process. Proper flow and sentiment analysis benefit from careful tracking of surveys like the eponymous BoAML GFMS. This approach worked particularly well at the end of last year as the bond markets turned higher and real money and HFs chose (or were forced) to buy the rally (“MI2 Chart Point: Bonds” 11th Nov 2022).
While history is never the same, we all know it rhymes, and since the start of this US equity bear market, we’ve been struck by the similarities to the dot.com bubble whereby reflexive momentum and a price-induced supportive narrative resulted in a decade where there was no alternative to US stocks and the virtual vortex sucked in money from the rest of the world to fund a period of “US Exceptionalism”. Unfortunately, the good times couldn’t last, and cracks have emerged as central banks have removed policy accommodation. The pain isn’t unique to the US. However, the US is particularly vulnerable and Europe's own needs increase the odds that the vortex will run in reverse. As we will outline below, the result is that the decade-long outperformance of the US vs its peers appears to be breaking down.
As we start the New Year, it is tempting to think that we’ve consigned the misery of the last twelve months to the past and can instead focus on a bright new investment horizon. Unfortunately, that’s rarely the case, and typically after a short respite, which we may have already had, the market is forced to face its old demons again. We believe this year is no exception.