Anneka Treon
@AnnekaTreon
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Chief Economist Int’l. Market thoughts. Views are personal, catch me on @CNBC @BloombergTV @FT
Joined October 2020
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Pinned Tweet
If you can earn 5% risk free, why bother taking on risk…
Thoughts?
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Do people understand how bag things are getting in Germany? Thread 👇🏼
Vonovia the largest real estate company will drop the temperature of gas heated buildings to 17 degrees Celsius at night. Some housing cooperatives and giving quotas for when residents can use hot water
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"Our country may be heading for the worst economic crisis since the founding of the Federal Republic of Germany," said Friedrich Merz, leader of the biggest opposition party, the center-right Christian Democratic Union (CDU),
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For the first time in decades, the balance of trade is tipping so that the country is importing more goods than it is exporting. German companies are being threatened with a loss of international competitiveness
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There is talk of an energy state subsidy of €9 billion, similar to the money provided to the airline Lufthansa at the height of the coronavirus crisis.
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Industrial production of steel, chemicals, and glass could fall by 50%
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And the DAX is only down as much as the Eurostoxx YTD. Feels like markets are really not pricing this in
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Is a 7.7% inflation print really a reason to celebrate ?
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We have never placed this much attention on green energy, yet oil is at almost $100/ barrel. What am I missing ?
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The risk of a recession in Germany has more than doubled after the war on Ukraine
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Many are predicting US $ weakness because of declining treasury yields, lowering $ demand. But let’s not forget the other side.
>80% of global trade is denominated in US $. A global recession would slow global trade, reducing dollar liquidity, thus a strengthening $
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During the 2000 dotcom and 2007 credit booms, US margin debt topped out at roughly 3 per cent of gross domestic product. Now it is nearly 4 per cent.
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Blackstone Property Partners, a real estate offering for big institutions such as pension funds and endowments, is facing redemption requests equal to 7 per cent of its $73bn net asset value
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Cathie Wood’s ARK fund is down more than 75% from its 2021 high. Almost all gains ARK made from the pandemic bull market have been wiped out
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So this is what these personal finance sites and spreading. Thoughts?
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What happens when the Fed starts selling mortgage backed securities in order to meet its QT goals?
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The “buffet indicator” (total market cap of stocks divided by GDP) is looking frothy. Brings up the debate all over again- is this time different?
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“Never catch a falling knife”. How’s one supposed to know when a knife has finished falling? How many days/ weeks / months of green performance ?
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Interesting to see how European banks haven’t kept up with bond yields. Is the gap still explained by the war and rising credit risks or are there other theories out there?
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It is bizarre that a nation with almost $4trn of GDP is struggling to provide the basics to its people
🇩🇪⚠️"Our country may be heading for the worst economic crisis since the founding of the Federal Republic of Germany," said CDU leader Friedrich Merz
➡️How big of a bail out is coming and can
#Germany
afford it?
[ht
@AnnekaTreon
]
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Russia is entering a better economic situation than where they were pre-war. Sanctions from Europe and the US that were intended to inflict pain have ended up backfiring, putting Russia in a better negotiating position.
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The next black swan comes from too much financial leverage in our system. The smallest thing will unwind something painful which will wake the financial system up to the fact we’re playing with fire…… thoughts?
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World’s largest hedge fund betting against corporate bonds because of a turning credit cycle
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Retail investors are more exposed to stocks this time around versus the last bear market. Consumer confidence was already at a global financial crisis level before this stock market crash. How much more can consumers withstand before starting cutting spending ?
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7 members of the Fed expect terminal rates to go higher than 5.25%
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It feels like we’re all still under estimating how cold Europe’s winter will be
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Google searches for recession are now on par with searches for the term back in 2008 and 2009. We haven’t got the official record of 2 -ve GDP Qs. However it if it looks like one, swims like one and quacks like one…
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Who runs the world?
60% of all new money that entered US equities over the last 10yrs has gone to Blackrock and Vanguard
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25-30yrs ago Europe produced more LNG for Europe than Russia did. It reversed because European environmentalists forced supplies to be shut down. What does this teach us about setting environmental policy going forward?
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Talking to
@BloombergTV
this am about the contagion risk of Germany for Europe. If Germany can’t access sufficient natural gas supply we could see Covid-like stops in manufacturing and painful recession. With Germany at almost 1/3 of EU GDP this adds to Europe’s perfect storm
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Looks like Powell was waiting for his re-election before ditching the world transitory. Which has resulted in unfortunate timing to say the least
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Is CPI really the right metric to track or are we all obsessing over something that is no longer representative of the thing it’s supposed to measure ?
"Central banks are obsessed with headline
#inflation
..."
@AnnekaTreon
&
@JackFarley96
on everything from the end of passive strategies & the persistence of inflation to why investors can no longer rely on central banks to support asset prices.
Watch 👉
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Europe is a scary place. There’s too high inflation, fragmentation across EU countries and an energy crisis.
Look at its largest economy Germany. Inflation is 8% even despite the government subsidizing energy prices. Meanwhile policy rates are still -ve.
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One year ago market pundits were forecasting headline CPI to be at 2.75% by YE22.
Why do we spend all this time forecasting again?
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The yield on US junk bonds has dropped below inflation for the first time… we need to pay serious attention to this one
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If the Big Short’s Michael Burry failed in shorting big tech, does that leave hope for anyone else? Isn’t it wiser to just throw in the towel and simply follow the monopolistic big tech movement
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Berkshire Hathaway is now sitting on a $145bn cash pile. That’s almost two times the GDP of Sri Lanka
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People often look to TIPS (inflation linked treasuries) as an indicator of expected inflation. But the Fed now owns approx 25% of TIPS which makes them very distorted. Thus not a reliable indicator
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The stock market’s run out of exuberance but
#PrivateEquity
hasn’t. There’s a day of reckoning ahead for PE investors driven by lower volatility and high returns. It’s simply blindfolding mark to market NAV. But there are structural exciting themes within private markets.
@FT
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Option trading volumes are now about 50 per cent more active in nominal dollar terms than all actual stock trading
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How do you know if a stock is under the radar?
A) less than 5 analysts covering the stock (mostly local)
B) not belonging to an obvious sector so falling btw the cracks
C) <1bn market cap
I’d say A) + B) or does anyone have better ideas?
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Where will the incremental surprise come from if this is already baked into expectations?
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Look at this retail mania. The problem here is that it’s driven by private individuals riding on momentum stories, meme stocks. It adds to the % of assets being influenced by non fundamental thinking
Retail equity allocation is at record highs, eclipsing even the Q1 2000 equity allocation boom. 😳
This is a problem as there may not be enough cash on the sidelines to buy a meaningfully deep dip (10%+).
It also suggests that retail is experiencing euphoria.
$SPX
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Look at the decoupling of the relationship between bonds and equities over the last 6 weeks. Stock markets don’t care what bond markets are saying, they’re just going up.
📈 Is It Time To Stop Following Central Banks? 📉
Managing director & head of the Competence Center at Van Lanschot Kempen,
@AnnekaTreon
&
@JackFarley96
.
Watch 👉
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Yield curve inversion - a long time recession predictor - is persisting.
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This is a really important chart. Real policy rates in the US have finally turned positive
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Global corporate income tax rate over the last decades…
Thoughts?
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In the 20 yrs since September 11, 2001, the U.S. has spent more than $2 trillion on the war in Afghanistan. That’s $300,000,000 dollars per day, every day, for 20yrs
#forbes
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Thread 👇🏼
Why is Evergrande such a big deal? Because the real estate sector in China is huge, real estate and real estate related industries represent 1/3 of China’s GDP. The contagion effect of a slower China 🇨🇳 on global GDP is huge…
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BoJ doesn’t raise rates because inflation is “transitory”. Is that a deja vu or what?
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In the UK, 14% of mortgages are variable rate. 25% of mortgages are fixed for only 2 yrs. This makes the UK economy much more rate sensitive compared to others.
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Private jet usage has surged by almost one third since the pandemic.
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Only 5% of US mortgages are on variable rates today, compared with >20% in 2007
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BlackRock’s research unit has said China should no longer be considered an emerging market and recommended investors boost their exposure to the country by as much as three times.
- That's a bold move given all the governance question marks. Thoughts?
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China Q2 GDP of 0.4% vs forecast of 1.2%. There goes one of the long standing global pillars of growth
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Thanks
@RealVision
@JackFarley96
for the great chat!
📈 Is It Time To Stop Following Central Banks? 📉
Managing director & head of the Competence Center at Van Lanschot Kempen,
@AnnekaTreon
&
@JackFarley96
.
Watch 👉
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The BoE forecasts a recession for the UK
The ECB doesn’t forecast a recession but sees it as an alternative scenario plus see downside risks to growth.
Shouldn’t the ECB just call a spade a spade a la BoE and acknowledge that a recession is coming?
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Summary of last week’s central bank narratives:
*Fed: “more work to do” to defeat high inflation
*ECB: “more ground to cover”
*BoE: “forceful” in battling price rises.
For those waiting for a pivot - don’t hold your breath
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India to eventually replace China as manufacturer to the globe?
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Powell says tapering could start this yr. But questions remain: How long will it take? Will Powell slow or even reverse course of tapering if the economy slows? When will rates move? Powell himself doesn’t know. So let’s stop following the Fed and get proactive
@RealVision
👇🏼
📈 Is It Time To Stop Following Central Banks? 📉
Managing director & head of the Competence Center at Van Lanschot Kempen,
@AnnekaTreon
&
@JackFarley96
.
Watch 👉
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The stock mkt is at the same level as pre summer last year. But at that time US policy rates were at 0.15% vs a rate of 3.75% today.
Mkts are totally disregarding the role of rates.
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Last week was the final Q rebalancing. Investors with a 60/40 portfolio (there are more than you might think) had to buy significant sizes of equity to maintain the balance to start Q3. That contributes to what many call a bear mkt rally. Question is what happens from next week?
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German 10yr yields go positive for the first time in 10 years
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Too many of us are forgetting what happened in 2020. Inflation is for a large part a product of 15-20% of GDP that was injected into the economy via fiscal stimulus
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Thanks
@CNBCWEX
.
@SullyCNBC
got it right on target with the whale! 🐳
"Powell wants to leave his door wide open, and a reason for that is a shift from Wall Street to Main Street, finally."
@AnnekaTreon
on her expectations for changes in interest rates and what Powell intends to do this year:
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Powell: failing to restore price stability would be a “bigger mistake” than pushing the US into a recession.
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Free capital has been a weapon of economic destruction for this generation of companies. It’s tempted good companies that could have been great companies to get complacent. Around capital allocation, operating expenses, margins etc.
RIP free capital, it’s now about discipline
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@lisaabramowicz1
It’s a tough one because for economies to recover, lending needs to resume to those that need it the most. But these are areas that banks don’t want credit exposure to given increasing risk of default. It’s a catch 22. Governments will need to play an (even bigger) role.
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Last yr a 6month T bill yielded less than 0.05%. Now it yields >3%. That’s more than double the yield of the S&P500.
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US private sector balance sheets haven’t been this healthy in almost 20yrs
*Consumer debt to disposable income is lowest in 20yrs
*Corporate debt is low
*Bank balance sheets are strong
*The US govt has the biggest debt problem - c.100% of tax receipts go to interest payments
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@davidbelle_
Yes but earning >5% is a multi step process. Spreading risk, taking calculated bets. 5% as a base to build on seems sensible
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PE and VC will always lag what’s happening in the equity market because of time duration and a lack of instant mark to market NAV. But to think that there isn’t a correlation between the two is an illusion. In the unlisted world, investors are simply forced to show patience
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While the UK isn’t officially in a recession, it certainly feels more and more that way…
@business
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Central banks around the world spent the last period racing to the bottom in rates.
Now they’re racing to protect their currency.
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In Wall Street investors have profited big time from the consensus long
#dollar
trade. In the real world, developing countries are on the brink of a deep economic crisis as they struggle with a $400bn debt pile. Sri Lanka defaulted on $7bn of debt in May. Looks like more to come
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US companies laid off approx 100,000 people in Jan. Yet the Jan US jobs report was blowout, with >500,000 jobs being created over the month of Jan. What’s happening?
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