We’ve been at this business for a number of years and the present situation is one of, if not the toughest we’re ever had to navigate. We’re thankful for no major casualties along the way.
Coming into this week, clients we advised to look for more US vigor than that which was priced in; that is, than consensus. There was/is a flaw to St estimates, a result of the clubby nature of that environment and thus lack of independent research. One of these types changed his view after seeing the data, noting today that, "A recession now seems a lot less likely." Of course the horse is long gone.
If there were to be surprises this week they were to be to the side of more vigor, not less and clients were to prepare for that event. That was indeed the result as PPI and the Philly Fed flattened estimates. Industrial Production (+0.2%), CPI (+0.3%) and Claims were about as expected.
Recent crude price activity might represent a threat to our constructive view on the consumer. Recall that it was crude as tagged to the Arab Spring which crippled US consumer activity late Q1, Q2 by the way of gasoline prices. Now we must look no further than the recent work of our colleague Nick Kennedy to see that crude prices represent perhaps less of a threat, and are likely to move lower over the intermediate term.
Finally, clients were advised Oct/9 to expect positive results from the EU, not to position for disappointment. Events last week made us out to be seers; this week it seems we’ve lost some traction. We still expect events there to congeal, and in a positive fashion. It is in fact those in the cheap seats who will be disappointed.
Robert Craven
Coming into this week, clients we advised to look for more US vigor than that which was priced in; that is, than consensus. There was/is a flaw to St estimates, a result of the clubby nature of that environment and thus lack of independent research. One of these types changed his view after seeing the data, noting today that, "A recession now seems a lot less likely." Of course the horse is long gone.
If there were to be surprises this week they were to be to the side of more vigor, not less and clients were to prepare for that event. That was indeed the result as PPI and the Philly Fed flattened estimates. Industrial Production (+0.2%), CPI (+0.3%) and Claims were about as expected.
Recent crude price activity might represent a threat to our constructive view on the consumer. Recall that it was crude as tagged to the Arab Spring which crippled US consumer activity late Q1, Q2 by the way of gasoline prices. Now we must look no further than the recent work of our colleague Nick Kennedy to see that crude prices represent perhaps less of a threat, and are likely to move lower over the intermediate term.
Finally, clients were advised Oct/9 to expect positive results from the EU, not to position for disappointment. Events last week made us out to be seers; this week it seems we’ve lost some traction. We still expect events there to congeal, and in a positive fashion. It is in fact those in the cheap seats who will be disappointed.
Robert Craven
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