Macro Sunday #44 - The fake business cycle - Guest: Bob Elliot
Apr 7, 2024
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Former CO-CIO of Bridgewater, Bob Elliot, discusses the fake business cycle signals, inflation assets in Q2, and overbought commodities. Topics include cyclical upswing, geopolitical situation, and portfolio news. Insightful analysis on economic trends, manufacturing recovery, and navigating commodities amidst geopolitical tensions.
Geopolitical tensions in the Middle East impact commodity investments favorably, highlighting silver as a promising trade opportunity.
Norwegian Central Bank's FX policy changes may boost the Norwegian Krone, enhancing liquidity and affecting oil payments.
Deep dives
Middle East Stability Concerns
The podcast episode delves into the ongoing instability in the Middle East, particularly focusing on the actions of Netanyahu and the implications on regional support and stability. Despite hopes for a truce, the situation remains volatile, with perceptions shifting and potential consequences for the broader geopolitical landscape. There are indications of increased tensions and a return to historical animosities, highlighting a fragmented and uncertain future for the region.
Reflation and Commodity Trends
The discussion highlights a shift towards reflation and commodity investments, driven by various factors including safe shipping concerns, manufacturing demand, and geopolitical influences. The podcast emphasizes a positive outlook on commodities, with a specific focus on silver as an opportunistic trade amidst a potential melt-up scenario due to underweight positions in the market.
Norwegian Central Bank Policies
A brief analysis of the Norwegian Central Bank's FX policy recommendations is presented, indicating potential positive impacts on the Norwegian Krone. The suggested changes are expected to enhance liquidity in the money markets and influence the flow of the currency, particularly in relation to oil payments and banking system intricacies.
Korea Trade and China's Rebound
The podcast touches upon the Korea trade dynamics as a proxy for China's performance, given the challenges in assessing China's economic rebound. Korea is seen as a favorable option with Samsung's resurgence driving the market. Despite uncertainties around China's recovery, the Korea trade remains a strategic position in light of evolving trends.
Is the business cycle sending fake signals again, and is it fair that markets have priced out the entire recession risk? How will inflation assets thrive in Q2 given the Manufacturing rebound and are commodities, especially within metals, overbought in light of this? We take the discussion with former CO-CIO of Bridgewater Bob Elliot who is now running the investment office at Unlimited Funds.