Research Summary

The report discusses various aspects of the global economy, with a focus on the US and China. It highlights the ongoing Quantitative Tightening (QT) and its impact on liquidity. The report also discusses the outperformance of large cap growth over large cap value in the last 14 years. It points out the high hedge fund gross positioning, suggesting elevated risk. The report also touches on the struggling Chinese economy and the slowing growth in the Euro Area. It discusses the shift in the US central bank’s views on the economy, the decrease in US middle-class wealth, and the rise in household budgets. The report ends by discussing the low levels of the US strategic petroleum reserve and its potential impact on the price of crude oil.

Actionable Insights

  • Monitor the impact of QT: The ongoing QT is beginning to tighten liquidity again, which could have significant impacts on the global economy.
  • Watch for value stocks: Value stocks are likely to outperform during the next credit cycle, presenting potential investment opportunities.
  • Be cautious with hedge funds: With hedge fund gross positioning at high levels, the risk is elevated, suggesting caution in this area.
  • Keep an eye on China and the Euro Area: The struggling Chinese economy and slowing growth in the Euro Area could have global ramifications.
  • Consider the impact of inflation: Rising household budgets and “rentflation” are putting pressure on consumers, which could have broader economic impacts.
  • Watch oil prices: With the US strategic petroleum reserve at its lowest level since 1983, any major disruption could significantly impact the price of crude oil.

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