LIVE MARKETS-Grappling with "distorted and confused" macro signals
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GRAPPLING WITH "DISTORTED AND CONFUSED" MACRO SIGNALS
Financial markets are understandably moving erratically as traders grapple with what Alessandro Fugnoli, strategist at asset manager Kairos, describes as "distorted and confused" economic signals.
Fugnoli points to significant challenges in interpreting incoming macro data. He notes inconsistent release timings and the difficulty in figuring out whether strong figures reflect genuine economic health or merely tactical stockpiling ahead of tariffs - ambiguities particularly problematic for sentiment indicators in volatile times.
"The signal coming from the real economy continues to be distorted and confused. It will be so in the coming months too," he writes in his latest weekly note. And if that weren't enough, policy signals can also appear "contradictory and difficult to decipher," he says, adding further to volatility.
The strategist says the ongoing US-China trade negotiation is the "great unknown," clouding forecasts for the economy and markets. Fugnoli says the current US supply shock is different than the one during COVID. Weaker policy support this time will likely result in less inflation but also slower growth.
However, he highlights solid Q1 corporate earnings as evidence suggesting underlying economic activity has held up better than some headline figures might imply.
Given these ambiguities, Fugnoli says that the overall situation lacks a clear directional bias. "For the moment there are no elements either to adopt a strategically constructive position or to be necessarily pessimistic".
(Danilo Masoni)
MONDAY'S OTHER LIVE MARKETS POSTS:
EARNINGS MISSES PUNISHED BY MOST IN 20 YEARS CLICK HERE
EUROPEAN SHARES MIXED, ENERGY LAGS CLICK HERE
EUROPE BEFORE THE BELL: FUTURES NUDGING HIGHER CLICK HERE
TAIWAN DOLLAR LEAPS; BUFFETT TO STEP DOWN CLICK HERE
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