Britain’s Policy Trap Deepens
The UK faces weaker growth, softer labor markets, and a fresh energy-driven inflation shock. With rates likely stuck for now, sterling may become the main release valve.
bobeunlimited.substack.com/p/britains-p...
Been a big supporter of @prometheusmacro by @AahanPrometheus since the early days so it was a real pleasure to join him recently to discuss navigating these uncertain times. As usual I got a lot out of his perspective. Check it out!
youtu.be/icM1Kj6d4ac?...
When hedge fund managers stuff talent cost directly on clients they have all the incentive to offer spiraling higher pay packages b/c worst case, the client just pays. And in the process managers have lost all credibility as a fiduciary.
www.bloomberg.com/news/feature...
We are only just starting to see the impact on real household spending power from higher gas prices thanks to the higher refunds. If prices are anywhere close to what is priced into the forward curve, households will face a drag through year end.
The surge in gas prices has more overwhelmed the higher refunds households have seen this tax season. h/t @thedailyshot
Diesel Disaster
Diesel and jet fuel prices are at record highs, raising transport costs across the economy. While folks focus on gas prices, these inputs create a bigger risk of broader inflation and supply strains.
bobeunlimited.substack.com/p/diesel-dis...
US markets now pricing in a boom in growth ahead.
Great joining the Milk Road Macro pod this week for a wide ranging convo on market expectations and how to manage through challenging market environments like these both tactically and strategically.
youtu.be/KLgAmpFYtPw?...
Kicked off last week on Bloomberg Surveillance to talk through how May 1st is the critical date for the Hormuz blockage to be resolved or lots of pain will come ahead.
youtu.be/3crFvmM5Xi0?...
And this was before the oil shock flows through. h/t EPB Research
Jumped on the Monetary Metals pod earlier this week to talk through some of the biggest dynamics going on in the yellow metal and how to navigate the macro uncertainties ahead.
While all eyes are on the Mideast, its worth remembering China is pretty clearly softening. My freebie of the week on the blog app:
bobeunlimited.substack.com/p/china-is-n...
Fresh new data this week assaulting the unreality of the tariff impact deniers.
Housing Market Stagnation
The combination of sales at cycle lows and far more sellers than buyers at current mortgage rates and price levels means residential housing will remain an economic drag for the foreseeable future.
bobeunlimited.substack.com/p/housing-ma...
Fun to join Milk Road Macro for a pod yesterday where I hit the major macro dynamics and offered some hot takes on lazy central bankers and equity analysts. Check it out!
youtu.be/KLgAmpFYtPw?...
Allocators want Global Macro more than any other HF strategy these days. If only there was a low-cost, manager diversified product out there...
Gas prices are up roughly 50% since the start of the year, which is going to create a real dent in spending power, particularly for lower-income cohorts.
The *majority* of job growth in the US economy in recent years has been in senior care.
Fascinating (and short) piece here: www.sageecon.com/p/unpacking-...
Small Business Squeeze
Companies face the increasing challenge of rising input costs and difficulty finding labor (as supply tightens) with limited pricing power to pass on rising costs to their customers.
bobeunlimited.substack.com/p/small-busi...
Great joining Bloomberg Surveillance yesterday morning talk through the consumer pressures already emerging and why it is critical for the Iran conflict to wrap up before May 1.
youtu.be/3crFvmM5Xi0?...
Extreme 1Q hedge fund dispersion should remind investors that single manager picking is akin to spinning the roulette wheel.
Far more reliable to diversify managers, target higher returns than what is offered out of the box, and lower fees.
Household nominal demand growth has slowed recently is because lower income cohorts that have a higher propensity to spend are seeing much weaker wage growth. Giving rich folks tax breaks doesn't support the economy much.
The second-order real economy disruption from 40d+ of Hormuz closure is just getting started now.
This is your daily reminder that the Strait is closed.
Nice color here on what ships have been moving, highlighting how its far from normal flow:
Prediction Markets Question The All Clear
While bond and stock markets have surged reflecting near certainty that peace and a Hormuz opening will come in short order, bets across prediction markets see it closer to a coin toss by summer.
bobeunlimited.substack.com/p/prediction...
Household discretionary spending held up in March, suggesting the initial response was to look through rising prices. But we did see the first signs that lower-income cohort started to pull back.
Hard to see households dissaving aggressively here to maintain their spending when current and future sentiment is so depressed.
This is your daily reminder that the Strait is closed.
Stopping by Bloomberg Surveillance (TV) at around 845am ET this morning. Check it out!
Economic War Builds, Markets DGAF
News over the weekend suggests the economic war is heating up from both sides, and yet US markets continue to price this conflict to be a transitory event which has already been largely resolved.
bobeunlimited.substack.com/p/economic-w...