Attack the Week (ATW)
Sunday Thoughts
I rarely get hooked on a television series. Once every few years, however, I am just drawn to binge-watch some captivating storytelling to satisfy my curious mind. This first happened with “24” when I finished the first season in an entire weekend. More recently, I would get similarly hooked on “Ted Lasso” or the outstanding “Yellowstone” series. Last week, my wife and I started watching “One Day” based on a recommendation from friends. It’s a 14-episode Netflix series based on the novel of the same name by David Nicholls. The storytelling, acting, and musical underpinnings are captivating. I couldn’t keep my eyes off it, with the story still stuck in my head after finishing it late last night.
The series beautifully encapsulates the idea of marginal insights through the lens of its protagonists, Dexter and Emma, whose lives are revisited on the same day — July 15th — over twenty years. This narrative technique crafts a poignant story of love and friendship and demonstrates that while daily fluctuations may seem trivial or chaotic, viewing life from a broader perspective can reveal a clear trajectory of growth and change. It’s a beautifully scripted television series worth watching, but by all means, take your time.
Every year brings its own unique story. This is very much true in everyday life as it is for financial markets. It is, of course, always easier to connect the dots backwards than forward. Decoding the short—term noise from the longer-term forces is what macro is all about and what distinguishes the masters from the rest. Investing based on last year’s story is often a losing proposition. The disinflationary soft-landing narrative has certainly lifted many boats over the past year, yet last week’s higher-than-anticipated inflation readings might have another chapter in store for us. Friday’s US core PPI (ex-food, energy, trade) significantly beat estimates at 0.6% MoM in January, and preliminary Michigan survey data for February showed inflation expectations stubbornly sticky.
Treasury yields have fully retraced the rally since mid-to-late January and are now at YTD highs amidst a lack of a macro catalyst to warrant imminent easing. Resilient growth and inflation are still not at target, challenging the expectations of early easing.
Markets are simply pushing out the rate-cutting cycle for now, which makes sense. I wonder, as mentioned last week, how long this will continue in light of possible further inflation surprises in the coming months.
I will touch on this in separate posts, but it’s something everyone should keep on their radar.
For now, let’s look at what’s in store for the week ahead and what data points we should be mostly focussing on. We will also look at what charts we should keep in mind when assessing opportunities. It’s not the busiest of weeks, but regardless, the dullest times can sometimes turn out to be the most interesting.
Let’s go!