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Prometheus Research Profile picture
@prometheusmacro
Jun 19 • 9 tweets • 5 min read Twitter logo Read on Twitter
The Weekly Recap (12.06.23 ~ 16.06.23) 🧵

Missed out anything from a week full of #Macro & #Markets? Don't worry - we got you covered.

Below we share all the updates & opinions threads from last week. Make sure to follow @prometheusmacro for much more.

#MacroMonday #market
1. We kicked off the week with our CPI Preview, highlighting the importance of keeping an eye out for the #used cars and #shelter prints.

2. This was followed by an in-depth analysis of the #fiscal impulse. Overall, our assessment suggested that government #revenues continue to paint a picture of weak private sector conditions.

3. We also shared our insights comparing our CPI Preview vs Realized CPI. Both, #shelter and #used cars came in line with our expectations.

4. Next, in light of the recent Treasury Market dynamics, we provided a deep-dive into the forces driving the current pricing and complemented this with our expectations for the asset class.

5. This was followed by a break-down of the most recent CPI print and the key takeaways from the print. Overall, we reiterated that current inflationary dynamics will remain entrenched & the forces that supported a 60/40 portfolio will likely dissipate.

6. Next, we shared the latest insights for the weekly release of MBA Mortgage Applications data.

7. This was further complemented with an analysis of the Weekly Claims Data.

8. Finally, we concluded with the analysis of Retail Sales. Overall, we suggested that the recent increse in retail sales will likely flow through to an increase in #consumption, bringing real retail sales out of contractionary territory.

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More from @prometheusmacro

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Jun 21
🧵 On Liquidity Improvement

1/10 Liquidity is the flow of cash & cash-like assets that potentiates economic and market activity. In this thread, we discuss some of the components of the liquidity ecosystem. Particularly, we focus on short-term liquid assets: Image
2/ There are two dimensions two liquidity: private-sector liquidity and public-sector liquidity. The Fed’s slowing of its liquidity drain has stabilized public sector liquidity. On the other hand, sustained nominal income has continued to flow through to private sector liquidity.
3/ The combination of these dynamics has been a support to liquidity conditions. We show our aggregate tracking of short-term liquid assets below: Image
Read 12 tweets
Prometheus Research Profile picture
Jun 20
On Industrial Production & PMIs

1. As of the latest available data, our PMI composite now shows a reading of -10.93. PMIs are generally strong directional indicators of where we are in the profit cycle. Image
2. This is because PMI respondents manage inventories and orders in response to their outlook on revenue and profitability.
3. Nontheless, we ived some degree of mixed messaging from incremental PMI data points. n particular, Empire Manufacturing PMIs showed sequential improvement, while Philadelphia Fed PMI worsened.
Read 18 tweets
Prometheus Research Profile picture
Jun 19
On Business #Sales

1. While #households create most of the spending in the economy, businesses engage in investment and employment to generate profits. Therefore, sustained #consumption is contingent upon companies using labor to create output. Image
2. Typically, when output has declined, employment has followed suit. We show this in the visualization above.
3. In the visualization presented in 1. we show howe show how periods of decline in real business sales (i.e., business output) create pressure on employment growth. Every period of protracted contraction in real sales has resulted in an eventual contraction in unemployment.
Read 18 tweets
Prometheus Research Profile picture
Jun 15
On CPI

1. CPI #Inflation increased by 0.12% in May, surprising consensus expectations of 0.1%. This print contributed to a sequential deceleration in the quarterly trend relative to the yearly trend. Image
2. Above we show the monthly evolution of the data relative to its 12-monthly trend and consensus expectations.
3. At the subcomponent level, the primary drivers of this print were #Motor fuel (-0.2%), #Energy Services (-0.05%), Transportation Commodities Less Motor Fuel (0.11%), #Shelter (0.19%), & #Transportation Services (0.05%). Below, we show the top 10 drivers of the monthly change: Image
Read 8 tweets
Prometheus Research Profile picture
Jun 15
Treasury Market Signal 🧵

1. CPI Inflation increased by 0.12% in May, surprising consensus expectations of 0.1%. This print contributed to a sequential deceleration in the quarterly trend relative to the yearly trend. Image
2. However, we think it is important to note that excluding food and energy, i.e., core CPI, was up 0.40% this month— implying a 4.9% annualized rate for core inflation. This data is far removed from the Fed’s objective.
3. As such, #bond markets have moved to re-#discount expectations, moving away from aggressive expectations of easing, consistent with our views outlined in our Month In Macro note. We show this below: Image
Read 6 tweets
Prometheus Research Profile picture
Jun 14
CPI Preview vs Realized CPI

1. #CPI data came out largely in line with our expectations. Our expectations were for a print of 0.17%, while the print came in at 0.10%. Below, we show the composition of our estimates relative to the realized print: Image
2. Our pre-view note mentioned two factors we would be watching out for. First, we were looking to see whether #motor vehicle inflation remains persistent.
3. Given the industry dynamics we monitor, there was a potential for new cars to see deflation as manufacturing productions alleviate some degree of supply shortages. Nonetheless, #used car inflation likely showed significant potential to re-accelerate this month.
Read 6 tweets

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