Test for Sam
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
GDT #371 and # 372:
Given the relatively light participation from China (as expected), I thought that the last auction result was somewhat better than it could have been. A repeat of GDT #370 would not have surprised me. On the night, the Middle East and Southeast Asia stepped into the breach.
Reduced volumes announced by Fonterra this week and a step into “business as usual” before a relatively early Chinese New Year provide a few cross currents for this week’s auction, but the GDT Pulse last week showed positive signs, and the commodity futures markets closed with a very strong day on Friday on solid volumes after Fonterra’s announcements. It should also be noted that news globally on bird flu outbreaks in the US and a suspected case of foot and mouth (albeit contained) in Germany, may also have assisted sentiment in relation to GDT product.
The bounce in GDT Pulse can also be seen in the underlying commodity futures.
The MKP futures broke the steep uptrend channel, dipped, and then bounced. The absence of a strong move down from there may suggest we move into a sideways consolidation. That said, the MKP contract is trading in line with the MyFarm full year forecast post Friday’s rally, above the most recent NZX estimate but below Jarden’s and Redward Associates most recent estimate ($10.13/kgMS).
However, as noted, Friday’s price action was notable and a strong positive.
The charts below illustrate the strength seen late last week. WMP is now trading +2% to +4% over GDT #371 outcomes and SMP, perhaps impacted by those global supply concerns, is relatively even stronger with March and April contracts +10%. Thus we head into this week’s auction with expectations of a robust outcome. Even fading current commodity prices, we should go a long way to elimintaing the -5% aggregate fall recorded over the last 2 auctions.
US and Global macro:
It is early in the new year but so far we have had 2 sets of important US releases. The first was the December US employment numbers released earlier this month. In summary, they were much stronger than expected (+256,000 v +165,000 expected). This sent expectations of further rate cuts by the Federal Reserve tumbling further. Expectations for year end FFR rose to 4.06% pricing just 1 rate cut over 2025 and well above the December FOMC SEP (2nd chart below).
The print took this employment expansion to the joint second longest recorded, according to DB.
This was followed last week by consumer price data that was a touch weaker than expected. It was clear by this point, however, that the market was fearing something worse so a relief rally in interest rates and in equities followed this later release.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
JT Macfarlane
Director: Colmac Group Pty Ltd
Company Address: Level 35, 120 Collins Street, Melbourne VIC 3000
JT Mobile: +61 (0) 409 924 519
Office Mobile: +61 (0) 447 127 786
Email: john.macfarlane@colmacgroup.com
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
GDT #371 and # 372:
Given the relatively light participation from China (as expected), I thought that the last auction result was somewhat better than it could have been. A repeat of GDT #370 would not have surprised me. On the night, the Middle East and Southeast Asia stepped into the breach.
Reduced volumes announced by Fonterra this week and a step into “business as usual” before a relatively early Chinese New Year provide a few cross currents for this week’s auction, but the GDT Pulse last week showed positive signs, and the commodity futures markets closed with a very strong day on Friday on solid volumes after Fonterra’s announcements. It should also be noted that news globally on bird flu outbreaks in the US and a suspected case of foot and mouth (albeit contained) in Germany, may also have assisted sentiment in relation to GDT product.
The bounce in GDT Pulse can also be seen in the underlying commodity futures.
The MKP futures broke the steep uptrend channel, dipped, and then bounced. The absence of a strong move down from there may suggest we move into a sideways consolidation. That said, the MKP contract is trading in line with the MyFarm full year forecast post Friday’s rally, above the most recent NZX estimate but below Jarden’s and Redward Associates most recent estimate ($10.13/kgMS).
However, as noted, Friday’s price action was notable and a strong positive.
The charts below illustrate the strength seen late last week. WMP is now trading +2% to +4% over GDT #371 outcomes and SMP, perhaps impacted by those global supply concerns, is relatively even stronger with March and April contracts +10%. Thus we head into this week’s auction with expectations of a robust outcome. Even fading current commodity prices, we should go a long way to elimintaing the -5% aggregate fall recorded over the last 2 auctions.
US and Global macro:
It is early in the new year but so far we have had 2 sets of important US releases. The first was the December US employment numbers released earlier this month. In summary, they were much stronger than expected (+256,000 v +165,000 expected). This sent expectations of further rate cuts by the Federal Reserve tumbling further. Expectations for year end FFR rose to 4.06% pricing just 1 rate cut over 2025 and well above the December FOMC SEP (2nd chart below).
The print took this employment expansion to the joint second longest recorded, according to DB.
This was followed last week by consumer price data that was a touch weaker than expected. It was clear by this point, however, that the market was fearing something worse so a relief rally in interest rates and in equities followed this later release.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
GDT #371 and # 372:
Given the relatively light participation from China (as expected), I thought that the last auction result was somewhat better than it could have been. A repeat of GDT #370 would not have surprised me. On the night, the Middle East and Southeast Asia stepped into the breach.
Reduced volumes announced by Fonterra this week and a step into “business as usual” before a relatively early Chinese New Year provide a few cross currents for this week’s auction, but the GDT Pulse last week showed positive signs, and the commodity futures markets closed with a very strong day on Friday on solid volumes after Fonterra’s announcements. It should also be noted that news globally on bird flu outbreaks in the US and a suspected case of foot and mouth (albeit contained) in Germany, may also have assisted sentiment in relation to GDT product.
The bounce in GDT Pulse can also be seen in the underlying commodity futures.
The MKP futures broke the steep uptrend channel, dipped, and then bounced. The absence of a strong move down from there may suggest we move into a sideways consolidation. That said, the MKP contract is trading in line with the MyFarm full year forecast post Friday’s rally, above the most recent NZX estimate but below Jarden’s and Redward Associates most recent estimate ($10.13/kgMS).
However, as noted, Friday’s price action was notable and a strong positive.
The charts below illustrate the strength seen late last week. WMP is now trading +2% to +4% over GDT #371 outcomes and SMP, perhaps impacted by those global supply concerns, is relatively even stronger with March and April contracts +10%. Thus we head into this week’s auction with expectations of a robust outcome. Even fading current commodity prices, we should go a long way to elimintaing the -5% aggregate fall recorded over the last 2 auctions.
US and Global macro:
It is early in the new year but so far we have had 2 sets of important US releases. The first was the December US employment numbers released earlier this month. In summary, they were much stronger than expected (+256,000 v +165,000 expected). This sent expectations of further rate cuts by the Federal Reserve tumbling further. Expectations for year end FFR rose to 4.06% pricing just 1 rate cut over 2025 and well above the December FOMC SEP (2nd chart below).
The print took this employment expansion to the joint second longest recorded, according to DB.
This was followed last week by consumer price data that was a touch weaker than expected. It was clear by this point, however, that the market was fearing something worse so a relief rally in interest rates and in equities followed this later release.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November. ddd
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!ddd
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!fff
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.
The inflation data was followed by some dovish “Fed speak”, especially from Governor Waller and that further appeased markets. The inflation pressures were seen as largely coming from services and some signs of easing wages pressures also helped with future expectations of inflation pressures. In total it adds up to an “ok” inflation picture - albeit just 1 month and next month, the Fed will be facing into price rises from rising oil prices (but they are excluded from “core PCE”).
With unemployment low, jobs growth strong and inflation well off its highs, it does beg the question as to why the Biden Administration is leaving office with the aura of a failed Administration? The chart below (from Strategas) may hold the “key”. Their “common man” price level (as reported by BBG), includes food, energy, shelter, clothing, utilities, and insurance – that is, the non-discretionary items. It illustrates a clearly different set of outcomes under President Biden than prevailed under President Trump before him. It also sets out (in simple terms) the task ahead of Trump II.
“Victory” will not be easy. Inflation fears remain and the bond market is very attuned to the challenges. It won’t be lost on the Federal Reserve (or the new Secretary of the Treasury) that 10-year bond rates have risen almost 1% in the US since the first Federal Reserve rate cut back in September (2nd chart below).
The bond market is not the new Administration’s only challenge. DOGE [Musk & Ramaswamy] have stated that they want to take some $2T out of government spending and Scott Bessent has stated that he wants to cut the deficit from >6% of GDP to ~3% of GDP. If Q1 data is to be believed, they have a task in front of them with the deficit in Q1 24/25 being substantially worse than 23/24!
Enjoy the ride! 😊
During 2024, an estimated 3.7 billion of the world’s population went to the polls. As noted in prior editions of this note, no incumbent government received an increased share of the vote but, for the most part, democracy (where relevant) was the winner and the elections and transitions – where required - proceeded peacefully, although there were some unexpected “own goals” such as in France and Germany.
In a global context, the swing in the US (below) was far more moderate than we saw in many countries but it was sufficient to deliver the Republicans the popular vote, the Presidency, the Senate and the Congress - albeit the Congress by the narrowest of margins.
However, it is hard to recall a change in US Presidency having the same global focus and possible ramifications as this transition.
The inauguration and transition of power is tonight and executive orders are expected to begin almost immediately with immigration and tariffs at the top of the list. One thing is not being disputed, and that is that this Trump administration is better prepared and has a much better defined sense of direction (whether you like the direction or not) than the previous Trump administration. Notwithstanding Biden’s recent involvement in securing a ceasefire in the Middle East, the looming presence of Donald Trump, his advisors and his nominees has dominated since the elections in the first week of November.
On geopolitics, it seems to me that Trump doesn’t like “wars far away”, and expects the “locals” to take more responsibility – be that Europe or be it Japan, Korea and Australia – and looks set to focus much of his personal energy on the “western hemisphere” [20 degrees W to 160 degreees E] in terms of his sphere of influence. Hence his initial focus on everything from Argentina to Panama to Greenland!
In the eastern hemisphere there seems to be a bit of concern around possible relevance deprivation. Trump is seen as a transactional guy and the question being asked is “what do we have that he wants or would like?’ I’m not sure the meme below qualifies but it did appear promptly, in this part of the world, after Trump’s comments on Greenland!
As an aside, there was a “post-script” (locally) where Australians joked that the government had offered to “throw in” the State of Victoria in for free 😊.ddd