I find it laughable that many people think yields have already peaked for this cycle. Yes, yes, I know policy operates with a lag, and a growth slowdown is coming, and that supply-side issues aren’t solved by higher rates. But, in response, inflation doesn’t come down through hope and optimism alone, the growth slowdown won’t be severe without radical tightening, and supply-side price pressures still lead to higher inflation expectations and hence a stickier long-term problem. So, what’s the risk that I’m wrong? It’s that there’s a deep global recession coming very soon that is far more horrible than I can envision. Either way, it’s going to get much worse for US stocks in the second half.

함의: 금리는 물가 대비 여전히 낮고, 기대만큼 물가가 빠르게 안정되긴 어려움. 한 가지, 급격한 경기침체를 제외하면, 두 가지 경우에서 주가는 공히 부정적임.

The US economy is firmly in the middle of a slowdown that’s turning out to be worse than expected amid the war in Ukraine and China’s Covid Zero policy, according to Morgan Stanley strategists.

The euro sank to a 20-year low against the US dollar as investors pared bets on European Central Bank interest-rate hikes given the growing risk of a recession in the region. 

US Recession Chances Surge to 38%, Bloomberg Economics Model Says. The probability model, which incorporates a variety of factors ranging from housing permits and consumer survey data to the gap between 10-year and 3-month Treasury yields, is now flashing a 38% probability of a recession over the next 12 months. That’s up from around 0% just a few months before.

함의: 경기침체가 변수에서 상수로 이동하고 있음.

The Bank of England said the global economic outlook has “deteriorated materially” after surging commodity prices pushed up inflation around the world, posing a further downside risk in months ahead. The UK central bank said volatility in the cost of energy and raw materials poses a significant risk of disruption that could amplify economic shocks in the future. Officials will conduct a probe of the “opacity” and “lack of data” in commodity markets and how those links feed vulnerabilities.

함의: 영국 중앙은행은 에너지 및 원자재 가격이 촉발시킬 불확실성에 경제가 악화되고 있음을 지적함.

There are signs equity traders are entering the acceptance stage of handling a bear market.

A flattening S&P 500 index options skew -- the difference between the price of puts and calls -- suggests the implied risks of up and down moves are becoming more equal. The Cboe VVIX Index, a measure of expected volatility in the VIX gauge expected stock volatility, is falling. There’s also no clear bias in the flow of money into exchange-traded funds betting on either higher or lower volatility. The lack of clear direction from options markets isn’t great news for stocks, but it’s not terrible either.

함의: 옵션 시장은 지수가 레인지로 트레이딩 될 때의 포지션이 구축되어있음.

Today has seen a sharp sell-off in the EUR, not helped by weak French data, with the currency dropping against almost all G10 peers. Europe is uniquely exposed to the unfolding global energy crisis, and it will be a miracle if the region avoids a recession, while high inflation is already here.

함의: 에너지 수급에 가장 취약한 유럽이 경기침체를 겪지 않는게 오히려 기적임.

Until now, France could boast the lowest inflation in the entire euro-area -- with the exception of island state Malta -- after 25 billion euros ($26 billion) in pre-election giveaways kept the rate in check. Macron’s so-called “tariff shield” aimed to protect consumers from surging oil and natural gas costs. Yet rising prices are becoming harder to offset as they spread beyond energy to engulf food, goods and services. Meanwhile the government’s fiscal power is narrowing as rising borrowing costs mean public finances reach what Finance Minister Bruno Le Maire describes as an “alert level.”

함의: 소위 관세방패로 유럽서 가장 낮은 인플레이션을 유지한 프랑스도 재정지출 한계에 도달함.

The sharp decline in new orders while inventories remain robust is unambiguously bad news. The odds on a recession are rising. That feeds into a narrative that had already taken root among asset allocators. The latest survey of international money managers by Absolute Research Ltd. asks respondents to estimate the probability of various outcomes and shows that “TINA,” the idea that There Is No Alternative to stocks, is more or less at an end.

함의: 'TINA'라는 신조어가 만들어질 때야말로 거시경제 환경을 무시한 투자의 정점이었음.

The Fed must hike to 4-5% by next year, Bill Ackman said, which hopefully will be enough to snuff inflation. The mild and transitory price growth being priced by the market as of Friday is a fiction, he tweeted. Rates are going up a lot soon. The sooner the Fed quells inflation, the better for longer-term bonds and long-term financial assets like equities. That will save the economy in the longer term at the expense of short-term pain.

함의: 시간을 끌지않고 단기에 큰 폭으로 금리를 올려야 장기적으로 자산시장에 도움이 된다고 주장함.

At Bill Hwang’s Archegos Capital Management, staffers publicly professed their allegiance to “God, Hwang and Archegos” and the founder often described himself as “the money guy who teaches the Bible to pastors.” The “personality cult” of the collapsed family office is at the heart of a lawsuit filed Tuesday by former Archegos managing director Brendan Sullivan, who is seeking to recover $50 million he says is owed from deferred bonuses he was forced to invest with the company. Hwang, he says, did whatever it took to make money, with the goal of becoming the “richest person in the world.”

함의: 우상숭배에 가까운 기형적 구조의 조직, 그리고 끝없는 탐욕이었음.

In all this excitement, it can be easy to forget that the current bear market at the index level is so far shallow and short compared to previous downturns. The S&P has been in a bear market for six months, which is below the median of eight months and average of eleven months for bears going back to 1929. The tech-led bear market in the early 2000s lasted over two-and-a-half years. Even when we take into account how far the market has fallen, this year’s bear remains gentle by past standards. The “speed” of the current decline -- the market’s fall per month of the bear market -- stands at 3.4%, versus the median of 4.2% per month and the average of 6.2% per month. Much worse has been seen such as the cataclysmic 20% per month fall seen in the 1929 crash (and the less said about 2020’s “crash by fiat” the better).

함의: 최근 시장의 하락 기간, 하락 폭에 대해 이야기할 때 기간을 좀 더 과거로 보면 평균에도 미치지 못함.

Signs of a rapidly deteriorating US economic outlook have spurred bond traders to pencil in a complete policy turnaround by the Federal Reserve in the coming year, with interest-rate cuts in the middle of 2023.

The US is pushing the Netherlands to ban ASML Holding NV from selling to China mainstream technology essential in making a large chunk of the world’s chips, expanding its campaign to curb the country’s rise, according to people familiar with the matter.
Washington’s proposed restriction would expand an existing moratorium on the sale of the most advanced systems to China, in an attempt to thwart China’s plans to become a world leader in chip production. If the Netherlands agrees, it would broaden significantly the range and class of chipmaking gear now forbidden from heading to China, potentially dealing a serious blow to Chinese chipmakers from Semiconductor Manufacturing International Corp. to Hua Hong Semiconductor Ltd.

함의: 중국에 대한 미국의 태도, 중추적 기술에 대해서는 여전히 첨예한 대립 상태임.

A long way down. Oil plummeted, Treasury yields fell and US stocks wavered on fears of a slowdown. WTI declined more than 9%, dropping below $100 for the first time since May 11. The S&P 500 ended just in the green, while the Nasdaq rose solidly. The dollar gained across the board, hitting a two-decade high against the euro and putting parity in sight. Gold retreated. Asian equity futures are in the red. "This is a recession trade," Renaissance Macro's Neil Dutta said.

함의: King Leonidas, This is Sparta!

Bond investors are betting on a complete Fed policy turnaround in the coming year, with rate reductions in the middle of 2023 — despite a dot plot that predicts otherwise. Less than a month ago, traders were pricing in a cycle that took the fed funds rate target to more than 4%. Now, they foresee a peak around 3.3% in the first quarter of next year, followed by at least 50 bps of cuts that takes the benchmark to 2.7% by year-end.

함의: 한달 사이 4% 기준금리 상단이 3.3%로 하락, 해당 금리에서 내년 50bp 가량을 인하해 2.7%로 회귀할 것에 베팅 중임.

In recent days, there have been contrasting forecasts for oil. Some have called for a collapse to $65 per barrel, while others warned a “stratospheric” $380, if US and European penalties prompt Russia to inflict retaliatory crude-output cuts. The move lower this week has been driven by recession fears.

함의: Citi($65), J.P.Morgan($380) 중 누가 맞더라도 원인과 결과가 좋을게 없음.

In a year when stock-focused hedge funds are struggling with volatile markets, macro hedge funds that had been stymied for years by monetary easing are roaring back. A Bloomberg gauge of macro hedge funds worldwide rose 5.3% in the first five months of this year, against a 4.2% decline for funds of all strategies. The S&P 500 index meantime has plunged 20% this year. 

함의: 투자 성과가 기업 개별요인보다 거시경제 환경에 좌우되는 기간임.

The recent build up in open interest for Bitcoin futures is eerily similar to that seen just before the contract began a long descent from late 2021. That suggests the recent consolidation around the $20,000 mark is just a pause before another leg south.

함의: 비트코인 미결제약정 증가량이 2021년 하반기 하락 추세 시작점과 매우 닮았음.

Across the US, euro area, and UK, the focus for markets is on the chance of a recession in the months ahead. For many households, a sharp rise in the cost of living, combined with anxiety about the outlook, means that debate appears increasingly academic. The misery index -- which gauges household wellbeing based on the sum of inflation and unemployment -- shows conditions have deteriorated sharply, and are now comparable to those seen in past downturns.

함의: 물가와 실업률 합산으로 산출되는 고통지수가 과거 침체기 수준에 근접함.

Gold won’t save your portfolio from recession. That was the clear message from Tuesday’s trading, where the yellow metal fell 2.4% despite the growth concerns expressed in most assets -- Brent oil was down almost 10% and copper tumbled more than 4%. Bullion has been superseded by the dollar as a haven this year, partly thanks to rising yields. But in a further ominous sign for gold, it didn’t even gain any bid from the sharp decline in US yields over recent weeks. Investors must be wondering what kind of cataclysmic event is needed for the precious metal to finally get a break.

함의: 투자자들의 생각과 달리 최근 금이 방어해줘야 할 시점에서도 피난처로 작동하지 않고 있음.