MI2 Blog

Macro Insiders: In Focus Trade Portfolio – December 2022

This publication is your ‘go-to’ to view a summary of trade recommendations proposed by Julian and Raoul in their respective In Focus pieces. Each month, we update the performance of these trade recommendations, adding and removing trades as per the advice given in any In Focus publication or Flash Update.

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The Next Big Trade – Michael Gayed: This Bear’s Got Long Legs

It’s already been a tough, strange 11 months for everyone – and 2022’s not over yet. On a weekly interval basis, the S&P 500 has been in the red for more than 60% of the year. Treasuries have gone through multiple, nasty downturns and haven’t exactly performed counter to traditional risk assets. How much longer will this bear last? Are there any signs of hope? Michael Gayed, portfolio manager at Tidal Investment Group and the publisher of The Lead-Lag Report, joins Harry Melandri to break it all down on another fascinating episode of The Next Big Trade

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Five Charts Ahead of US Data

Just over a month ago, when we outlined that Treasuries were looking increasingly attractive, one factor driving our call was an acceleration in the decline of our economic models. Of particular note were the PMI models because not only is a decline in ISM Manufacturing typically associated with lower 10-year yields but also because it looked like we were on the brink of breaking levels that historically, unless the Fed eases policy, are solid recessionary signals. Fast forward to today, and looking at the price action in markets, you could be forgiven for thinking that’s exactly what the Chairman had promised to do.

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MI2 China Update: Ruling DPP Suffers “Historic” Defeat

  • Ruling DPP suffers “historic” defeat in Taiwanese midterm elections
  • Relations between China and US continue to deteriorate
  • Japanese chip equipment supplier has started to reorganise its supply chains 
  • Foxconn production in Zhengzhou hit by violent protests 
  • Signs of movement on zero covid policy as cases make new records
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Powell & Opportunistic Disinflation

  • Opportunistic disinflation is expedient but not costless
  • Even a recession might not truly defeat inflation
  • What will be required is a hawkish bias and vigilance that is maintained for years, not months
  • Markets aren’t priced for this scenario, and it still may fail, setting us up for a real shock
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Macro Insiders: Deep Dive from Julian – Roosting Chickens

It is not called the “energy complex” for nothing. Multitudinous products; regional disparity; fragmented logistics and infrastructure. With a heavy focus on Europe’s predicament, the chickens have all come home to roost this year. Long-term solutions are available, but the hiatus is now and will be with us for at least twenty-four months. Below a framework for future reference and some macro-observations in the fog of war

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