The Macro Trader examines whether early 2015 deflation fears were overstated and argues markets were signaling a steadier economic backdrop than many expected. The piece highlights improving consumer trends, stabilizing inflation expectations, and a preference for foreign equities, while noting U.S. valuations sat near historically expensive levels.
The Macro Trader: Global Macro Research and Analytics
The Macro Trader
Research
31 Pages
Key Takeaways
Deflation Fears Overdone: 5 year TIPS breakeven inflation stood at 1.40% and 10 year breakevens at 1.76%, suggesting inflation expectations had begun stabilizing after the commodity collapse.
Valuations Demand Caution: The Value Line Median Appreciation Potential was just 35%, ranking in the 96.80% percentile, meaning valuations had been higher only 3.2% of the time since 1968.
Foreign Markets Preferred: Only 43.48% of foreign ETFs traded above their 40 week SMA, while Europe and Japan were viewed as earlier in their economic cycles than the U.S.
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