{"id":49356,"date":"2019-11-01T12:57:45","date_gmt":"2019-11-01T17:57:45","guid":{"rendered":"https:\/\/olduvai.ca\/?p=49356"},"modified":"2019-11-01T12:57:48","modified_gmt":"2019-11-01T17:57:48","slug":"is-a-classic-end-of-cycle-melt-up-imminent","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=49356","title":{"rendered":"Is A &#8220;Classic End-Of-Cycle Melt-Up&#8221; Imminent?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.zerohedge.com\/markets\/classic-end-cycle-melt-imminent\">Is A &#8220;Classic End-Of-Cycle Melt-Up&#8221; Imminent?<\/a><\/h3>\n\n\n\n<ul class=\"wp-block-list\"><li><strong><em>Potential for the data deterioration theme to pause in the next quarter<\/em><\/strong><\/li><li><strong><em>Phase 1 US-China deal could pivot Manufacturers from inventory destocking to restocking<\/em><\/strong><ul><li><strong><em>Key manufacturers talking about this potential on earnings calls<\/em><\/strong><\/li><\/ul><\/li><li><strong><em>This underappreciated catalyst could cause a temp bounce in the economic data, lift stocks and curve steepeners even higher \u2013 classic end of the cycle melt up<\/em><\/strong><\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\"><em><strong>WARNING<\/strong>:&nbsp;This note contains content more positive than the past 10 months and may not be suitable for readers who are expecting a perma bear.<\/em><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/2019-11-01_9-16-14.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">I jest obviously but the theme all year has revolved around the idea of data deterioration.&nbsp; The question from those tired of that notion is always \u201cwhat would change your view\u201d and the answer is consistently:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>1) CB\u2019s adding liquidity<\/p><p>2) China-US trade war progress<\/p><p>3) EU fiscal stimulus<\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">For the first time all year, all three potential catalysts emerging at the same time which risks a Q4 melt up in risk assets and (I hope you are sitting down) an improvement in&nbsp;some&nbsp;of the economic data \u2013 mainly the manufacturing sector.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Central Banks pumping liquidity once again<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This has been THE driver of the cyclical \u201cup crash\u201d first kicked off around October 8th&nbsp; when Fed Chair Powell noted that the Fed will soon announce steps to add to reserves over time through the purchases of T-bills.&nbsp; Around the same time, as we discussed previously, many Fed officials began setting up the Oct cut which many thought was in question (Rosengren, Evans).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>That powerful force of a coming Fed liquidity injection + another Fed cut to sustain the expansion caused a key reversal in the macro landscape where:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>USD topped out and depreciated lower<\/li><li>Cyclical equities\/commodities bottomed and started to break out higher&nbsp;<\/li><li>Interest rates bottomed and started pricing out future Fed cuts<\/li><li>Yield Curves like 2s10s, that had been dormant, began to steepen&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Is A &#8220;Classic End-Of-Cycle Melt-Up&#8221; Imminent? Potential for the data deterioration theme to pause in the next quarter Phase 1 US-China deal could pivot Manufacturers from inventory destocking to restocking Key manufacturers talking about this potential on earnings calls This underappreciated catalyst could cause a temp bounce in the economic data, lift stocks and curve [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1675,27493,26527,27492],"class_list":["post-49356","post","type-post","status-publish","format-standard","hentry","category-economics","tag-economic-cycles","tag-end-of-cycle-melt-up","tag-mark-orsley","tag-prism-fp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49356","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=49356"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49356\/revisions"}],"predecessor-version":[{"id":49357,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/49356\/revisions\/49357"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=49356"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=49356"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=49356"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}