For the first time in perhaps a year we are in neutral. Our method is to set anchors for clients; thus equipped, clients can better anticipate economic reality ahead for key sectors, vs street consensus. They have a long leg up in capturing price change because they have in hand the direction of miss.
Since we have re-entered this arena (Spring 2011) results have been satisfactory; for example, we highlighted the impact of higher crude and the impact of a reckless Fed, H1, while the rest were looking in the wrong direction. Then early Q4 we were able to spotlight relative US vigor ahead, and in which sectors while most others were looking in the rear view mirror. Then, consensus had the US in the doldrums at best; there was a malaise cast over the market; many predicted a double dip.
These and other exercises were very satisfying, both from a personal standpoint, and because we were able to enrich our clients. But strategy cannot be forced; each of us has our limitations. Those who realize that fact, prosper.
Over the near term, we will take a very close look at all key US sectors to determine just where may be the next opportunity.
Offshore: Although the title of this report is US Economy Ahead we regularly fold in the UK and E-Z, as these may impact the US real sector.
UK: Early Q1 we had predicted that on the whole results for the UK, especially those related to consumer activity would flatten estimates. That has been the result, including of course Friday’s “surprising” Retail Sales print (+1.8% vs +0.4%, consensus). Naturally we were not absolutely constructive on the UK; we were simply aware to the general flaw built into most economists’ work. This flaw remains in place. Better to be prepared for these “surprises.”
E-Z: Clients have known since late Q4 that results would disappoint for this region, H1, and the reasons why, notwithstanding any EU “solutions.” On the whole that has been the result. ECB generosity did not and will not translate; Draghi threw a life preserver and we commend him for the action but once ashore the distressed ran for cover.
Never before in our experience have we seen so much press given to a single topic. It has been a feeding frenzy for the media but few if any have settled upon the unpleasant truth.
E-Z government leaders are in denial, they’re willfully blind, the whole bunch. They manufacture complexity to provide camouflage. But world investors are not in denial, which is why US Treasury rates remain so low, even past any short-term E-Z cheer. There is good cause for investors to continue to seek refuge because 1) either we will come to a fiscal union or 2) the system will fall apart. Both outcomes spell havoc yet there is nothing in between.
Robert Craven
Since we have re-entered this arena (Spring 2011) results have been satisfactory; for example, we highlighted the impact of higher crude and the impact of a reckless Fed, H1, while the rest were looking in the wrong direction. Then early Q4 we were able to spotlight relative US vigor ahead, and in which sectors while most others were looking in the rear view mirror. Then, consensus had the US in the doldrums at best; there was a malaise cast over the market; many predicted a double dip.
These and other exercises were very satisfying, both from a personal standpoint, and because we were able to enrich our clients. But strategy cannot be forced; each of us has our limitations. Those who realize that fact, prosper.
Over the near term, we will take a very close look at all key US sectors to determine just where may be the next opportunity.
Offshore: Although the title of this report is US Economy Ahead we regularly fold in the UK and E-Z, as these may impact the US real sector.
UK: Early Q1 we had predicted that on the whole results for the UK, especially those related to consumer activity would flatten estimates. That has been the result, including of course Friday’s “surprising” Retail Sales print (+1.8% vs +0.4%, consensus). Naturally we were not absolutely constructive on the UK; we were simply aware to the general flaw built into most economists’ work. This flaw remains in place. Better to be prepared for these “surprises.”
E-Z: Clients have known since late Q4 that results would disappoint for this region, H1, and the reasons why, notwithstanding any EU “solutions.” On the whole that has been the result. ECB generosity did not and will not translate; Draghi threw a life preserver and we commend him for the action but once ashore the distressed ran for cover.
Never before in our experience have we seen so much press given to a single topic. It has been a feeding frenzy for the media but few if any have settled upon the unpleasant truth.
E-Z government leaders are in denial, they’re willfully blind, the whole bunch. They manufacture complexity to provide camouflage. But world investors are not in denial, which is why US Treasury rates remain so low, even past any short-term E-Z cheer. There is good cause for investors to continue to seek refuge because 1) either we will come to a fiscal union or 2) the system will fall apart. Both outcomes spell havoc yet there is nothing in between.
Robert Craven
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