Losing my reflation religion?
1. Although US Equities made new all-time highs this week, the reflation trade that has been moving markets since early October is lagging in some corners, as evidenced by this week’s declines in EM Equities (-3%), EM Currencies (-2%) and Commodities (-2%), plus gains in DM Bonds and bond proxies (yen, gold, defensive equities).
2. The catalysts have been a hodgepodge of random messaging from the White House around trade negotiations (the President noted on Nov 12th that tariffs would rise “substantially" without a trade deal; poor Chinese activity data (see Ng); and broadening domestic political stress from Hong Kong SAR to Latin America