MyStratWeekly – February 14th 2023

Topic of the week: Overheating?

• It is now extremely unlikely that Europe will experience two negative quarters, fears of a difficult winter due to the energy crisis are no longer justified;
• On the other hand, the very ambitious fiscal stimulus has pushed activity above its potential on both sides of the Atlantic. Paradoxically, the risks of overheating are increasing;
• The risk could be that central banks would be forced to do even more and there would be a recession at the end of the year;
• Markets were overly pessimistic a few months ago, being almost certain of a recession that never happened. Are they now too complacent, when the second half of the year could prove difficult?

Market review: Disinflation or disillusion?

• Powell takes note of job market strength;
• T-note yields rebounds to 3.70% area, profit taking in equities;
• BoJ: Kazuo Ueda nominated as next governor after Kuroda;
• Stability in spreads despite protection buying on iTraxx Crossover.

Stéphane Déo's podcast

• An on the spot comment on US inflation figures?
• What about French unemployment figures?

Chart of the week

The European Commission’s latest quarterly industry survey shows signs of supply problems. 

Only 30% of businesses say there are no production-limiting factors. That’s one of the lowest in history.

26% who have problems recruiting, one of the highest historical and far above previous cyclical peaks.

37% who still have problems with supply chains, this is the main problem. We had never exceeded 15% before 2020! This is on a totally unusual level, even though it has fallen a bit since the peak of last quarter.