By Bobby Molavi, Goldman managing director and trader
Fat and flat. I think a pretty perfect description of where we find ourselves. No sooner had we seen a pretty material ‘stopping in’ and beta chase for investors do we see a renewed bout of nerves and risk off before an end of week climbing of wall of worry and more of the same in the form of the ‘pain trade’ rally that no one seems to benefit from.
The Russia escalation/de-escalation of a couple of weeks ago brings ‘fatter wings’ back into play of both resolution and escalation. China data continues to worry and the current stimulus offset not enough to prevent China ‘re-opening’ baskets trading back at recent lows and highlighting that any goodwill post covid impulse is behind us. European PMI’s (most notably Germany) all point to a clear and visceral slowing in manufacturing and finally corporate profit warnings in the Chem and transportation segments are leading indicators of a broader slowdown starting to take hold. Macro pointing to a less globalized and easy to read world. We saw strong data last week, counterintuitively, from the US consumer and US housing markets, offset by more weak data from China (weak PMI and Industrial data). We aare starting to see some worrying lead indicators across segments (chem profit warnings citing slowing industrial demand for cyclical products as well as consumer demand for discretionary items like Vitamins).
