... or what recently caught my attention in several points:
1) Double support for my “late-cycle deflationary goldilocks” scenario?
There are high chances that the FED will not only start cutting interest rates in March this year, but may also start QT (quantitative tightening) tapering in March, or even end QT. This would be additional support for my “late-cycle deflationary goldilocks” scenario: rate cuts and end of QT.
Why would the Fed end QT? … The Reverse Repo (“RRP”) which is slowly approaching zero. RRP generally supplies the financial system with liquidity, including the efficient functioning of the treasury bond market, but also, for example, financing the leverage of hedge funds. We had a similar situation in September 2019, when the FED not only ended QT, but also started a cycle of rate cuts. The RRP as of January 12 was only USD 603 billion (Figure 1).
Last weekend, Dallas Fed Lorie Logan said "In my view, we should slow the pace of runoff as ON RRP balances approach a low level."
Just look at the difference between loans and deposits (Figure 2). The "printed money" under QE generally does not reach the real economy (through loans), but "looks for its place" in the financial markets.
2) India vs China? Can India be the "dark horse" of Emerging Markets in 2024? Like in 2022?
At least the 2024 (YTD) returns suggest this:
India +2.14%
China -4.62%
Poland -4.73%
Σχόλια