The New CS Board

[jumanji0881]

"The Biggest News By Far Out Of Jackson Hole Was Coming Out Of The ECB NOT The Fed"
https://www.zerohedge.com/markets/biggest-news-far-out-jackson-hole-was-coming-out-ecb-not-fed

Excerpts:
”It was the ECB QT piece came out in the afternoon, and the ECB officials Holzmann and Knot confirming the morning leak from Reuters when they said Friday afternoon that 75bp should be considered at the Sept meeting that fueled the ECB angst in equities. It is clear now - on September 8th the ECB is going to hike and signal QT at the same time Italy is having elections a few weeks later - is just a very bad idea. I think people finally starting to pay attention to energy crisis in Europe and how the ECB needs to fight the resulting inflation with tools that do nothing to help the underlying problem (no more gas). This speaks to near term Euro strength vs. USD.”

For most of the last 10 days, even with the much talked up “China economic slowdown” and a surge in recession certainty in Europe – global bond yields kept moving higher. In just a few weeks, Italian 10s marched from 296 to 370bps.

Sovereign credit risk is on the rise in Europe – we have the ECB on September 8, the Fed on the 21st, and the all-important Italian elections on the 25th. The ECB has yet to pick its poison:

On August 11th - we distributed our largest – take down risk – “high conviction” trade alert sell since February of 2020, eleven positions with new shorts on the Nasdaq. U.S. equities have been priced for an American economy on Mars or Venus, NOT Earth. Into this mess - we have a Fed that is expected to do $1T of QT over the next 12 months, NO way. Bullish gold.

Bottom line: Near term inflation expectations are coming down with economic risks on the rise and a still hawkish Powell. The Fed is talking a tough game but risks a Lehman like event in Europe. Our highest conviction call looking out 6-9 months – is long the gold miners - GDX names GOLD, NEM, AEM.