Max Anderl
Head of Concentrated Alpha Equity

From too little, too late, to far too much

Central banks’ efforts to contain inflation are backward-looking and are reigniting fears of a recession

Global Manufacturing Purchasing Managers Index (PMI)

Line chart of the Global Manufacturing Purchasing Managers Index (PMI) from May 2017 through November 2022.

This exhibit is a line chart  of the Global Manufacturing Purchasing Managers Index (PMI) from May 2017 through November 2022. The chart shows the  PMI dipping below 50, the dividing line between expansion and contraction in around June 2022.

Record rise in costs for new mortgages: Buying or refinancing a house has become more expensive

Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022

Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022.

Average Rate on Outstanding Mortgages and the 30-Year Fixed Mortgage Rate 1992 through late-November 2022. Charts the average rate for new mortgages and the average rate on existing mortgages from 1992 through November 2022. New mortgage rates rose sharply beginning in mid-2022 and outstanding rates began to rise in late 2022.

Consequently, US housing transactions are falling sharply

Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications - US

US line chart shows the number of mortgage applications per week from 2017 through December 2022.

Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications – US. Line chart shows the number of mortgage applications per week from 2017 through December 2022, showing a downward trend from early 2022.

Meanwhile US Core inflation has stabilized as goods inflation starts to reverse

Shelter and services components continue to rise, but should slow later this year

Line chart showing the contributions of shelter, services, goods ex-autos and autos to core consumer price index inflation.

Shelter and services contribution to US core CPI inflation is a line chart showing the contributions of shelter, services, goods ex-autos and autos to core consumer price index inflation. All have risen since last 2021.

Inflation covers up economic weakness: nominal sales vs. real sales

US retail sales – nominal and real (adjusted for inflation)

A line chart tracks actual US retail sales and sales adjusted for inflation.

US retail sales – nominal and real (adjusted for inflation). A line chart tracks actual US retail sales and sales adjusted for inflation. The chart is raised to 100 on January 2020 and shows generally flat real sales from early 2021 on. 

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