Latest news with #QuantMetriks
Yahoo
3 days ago
- Business
- Yahoo
‘Stagflation is coming to the U.S.,' says this economist. Here's what it means for the dollar, bonds and stocks.
'If you look through the front windscreen rather than the rear-view mirror, it's clear to see stagflation is coming to the U.S.' That's the opinion of Savvas Savouri, managing director of QuantMetriks, an economic advisory boutique headquartered in London. I plan to work until 80. Can I contribute to my IRA while taking RMDs? Trade Desk's stock sees its worst drop ever, and analysts wonder if Amazon is to blame 'I have a great mortgage rate': I need $80K to buy my husband out of our home. Do I raid my $180K Roth IRA? As one might imagine, after a long career spanning academia, several investment banks and an extended stint as the economist at fund management firm, Tosca Capital, Savouri has strong opinions on economies, markets and asset prices, and expresses them unequivocally. His views on the direction of the U.S. economy are emphatic: inflation is going up, the dollar is going down and the yield curve is steepening. The inflationary pressures he cites are threefold: a declining dollar (which makes imports more expensive), the restrictions on cheap migrant labor pushing up costs and higher tariffs. That the impact of the tariffs have not manifested itself in data thus far is because they are lagging indicators, he says. Savouri is adamant that tariffs can only ever be inflationary, as was, he points out, almost all of Trump's campaign manifesto. He cites especially the pledges to re-shore manufacturing and the One Big Beautiful Bill Act earlier this summer that he regards as 'printing money'. In a note entitled 'The Inflationator vs The Powell,' Savouri predicted Powell's tenure at the Fed may be much shorter than the official departure date of May 2026, owing to the pressure being exerted by the White House. He draws an analogy with the central bank governors of Japan (Shirakawa in 2013) and Turkey (Agbal in 2021) who were discarded for not cutting rates when the political leaders demanded it. It wasn't so much 'the central bankers [who] were carried out of the monetary ring,' he quips, 'but the respective currencies'. Given his expectations for Powell, the direction of interest rates and inflation then, it's perhaps unsurprising Savouri is decidedly bearish on the dollar, describing a Wile E. Coyote moment of turbo-paralysis before it falls victim to gravity. This may be welcomed by the Trump administration. Indeed, a big call by Savouri is that any meeting between Trump and China's president Xi Jinping this year will deliver an agreement by Beijing to allow the renminbi to appreciate to help make U.S. goods more competitive. He thinks the buck's current peg to the Hong Kong dollar will thus be removed. As he sees it, if the dollar falls in tandem with Fed rate cuts and mounting inflation, then the U.S. Treasury yield curve must steepen (longer-term yields BX:TMUBMUSD30Y rising faster relative to short-term yields BX:TMUBMUSD02Y) even more sharply than it has already. Savouri asks, rhetorically, 'Who is going to buy long-term U.S. debt because he's [Trump] just launched a trade war against the traditional buyers?' His recommendation to investors looking to shield themselves from such adverse movements is to buy TIPS — or Treasury Inflation-Protected Securities — that adjust interest payments to match inflation. He also thinks these adverse developments could be beneficial to stocks, but not all of them. He argues inflation is good for those stocks — particularly the large caps/big tech that can pass on costs to consumers — that have a good percentage of their earnings overseas in other currencies, and whose balance sheets are strong enough to handle a higher-rate environment. The S&P 500 SPX might be fine then, but the Russell 2000 RUT or other small/mid caps that operate within America only, or whose balance sheets have a lot of short-maturity debt that will need to be refinanced at punishingly high rates of interest, will struggle, Savouri warns. He is no advocate of cryptocurrencies BTCUSD as a method to hedge against potential dollar ructions, and in fact believes their adoption now presents a systemic risk to American financial infrastructure. But Savouri does like gold GC00 as a reciprocal of the dollar and he's convinced that Australian demographics and fundamentals makes the Australian dollar AUDUSD the best bet in foreign exchange markets. U.S. stock-indices SPX DJIA COMP are slightly higher at the opening bell on Wall Street as benchmark Treasury yields BX:TMUBMUSD10Y inch higher. The dollar index DXY is lower, while oil prices CL.1 rise. Key asset performance Last 5d 1m YTD 1y S&P 500 6340 0.01% 0.95% 7.79% 19.19% Nasdaq Composite 21,242.70 0.57% 2.97% 10.00% 27.51% 10-year Treasury 4.249 2.40 -16.30 -32.70 30.30 Gold 3488.9 4.39% 4.68% 32.19% 41.40% Oil 63.97 -7.77% -4.34% -10.99% -15.93% Data: MarketWatch. Treasury yields change expressed in basis points Need to Know starts early and is updated until the opening bell, but to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern. U.S. president Donald Trump said he will nominate his economic adviser Stephen Miran as a temporary Federal Reserve governor. St. Louis Fed president and Federal Open Market Committee member Alberto Musalem takes part in a 'fireside chat' on banking and credit at 10:20 a.m. Eastern. Gold futures GC00 broke above $3,500 an ounce, hitting a record high before pulling back, after a report the U.S. is slapping tariffs on imports of 1 kg gold bars. Trade Desk shares TTD are diving after results that contained poorly-received guidance and news of a change of chief financial officer. Expedia shares EXPE are surging after the travel booking company raised its full-year outlook on the back of forecast-beating earnings. SoundHound stock SOUN is bouncing after the voice-based artificial-intelligence company exceeded revenue expectations for the latest quarter. How Chilean burglars target U.S. athlete's homes as they play. Why struggling companies are loading up on bitcoin. Intel's CEO, under attack from Trump, is already at odds with his board. Ned Davis Research produces Rally Watch, a gauge containing a number of indicators, such as investor sentiment, market breadth and the trend of the Cboe's VIX index VIX. Tim Hayes, chief global investment strategist at NDR, notes that the percentage of Rally Watch indicators is trending lower. '[T]he bull [market] has been reaching old age with the conditions right for a bear to get started,' he says. Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern. Ticker Security name NVDA Nvidia TSLA Tesla PLTR Palantir Technologies SOUN SoundHound AI AAPL Apple AMD Advanced Micro Devices GME GameStop AMZN TSM Taiwan Semiconductor Manufacturing NVO Novo Nordisk Have we reached peak doodle? Seinfield fans compete in Elaine dance contest. I tried breast milk-flavored ice cream. Here's the scoop. North Korean, wrapped in plastic foam, floats to freedom in the South. 'I feel like I'm going crazy': ChatGPT fuels delusional spirals. And in other news…..Prime Minister of Sweden uses ChatGPT to help him make decisions. For more market updates plus actionable trade ideas for stocks, options and crypto, . 'I feel shaken': A man offered to powerwash my patio for $50. He would not take no for an answer. 'She lives alone': My mother-in-law, 86, gets $1,300 in Social Security. Is that enough to live on?
Time of India
4 days ago
- Business
- Time of India
US faces stagflation risk — what it might mean for stocks, bonds, and the dollar
Stagflation threat looms over the U.S. economy, says economist Savvas Savouri Why the U.S. dollar may come under pressure in the months ahead Live Events Treasury bonds under stress as the yield curve begins to steepen Gold, TIPS, and the Australian dollar seen as top inflation hedges Gold : A classic inflation hedge, gold prices have already started rising in response to global uncertainty and U.S. tariff announcements on gold imports. : A classic inflation hedge, gold prices have already started rising in response to global uncertainty and U.S. tariff announcements on gold imports. TIPS (Treasury Inflation-Protected Securities) : These government-backed bonds are specifically designed to preserve purchasing power during inflationary periods. : These government-backed bonds are specifically designed to preserve purchasing power during inflationary periods. Australian dollar: With Australia's resource-rich economy and ties to Asian growth markets, Savouri sees the Aussie dollar as a safer bet amid dollar weakness. Big tech could shine while small caps face serious pressure Market reactions: Stocks edge higher, but gold rallies and dollar slips U.S. stock indices posted mild gains, driven mainly by tech stocks and defensive plays. posted mild gains, driven mainly by tech stocks and defensive plays. The U.S. dollar index slipped as investors rotated out of dollar-denominated assets. slipped as investors rotated out of dollar-denominated assets. Gold prices spiked, fueled by safe-haven demand and new tariffs that could drive up commodity costs. What this means for everyday investors and policymakers Prepare now, not later FAQs: (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel As fears of stagflation resurface in the United States, a top economist has raised red flags about the growing risks of high inflation paired with stagnant economic growth. From the weakening U.S. dollar to pressure on Treasury yields and uncertain equity markets, this forecast paints a sobering picture of what's ahead for investors and the broader rare and dangerous mix of rising inflation and stagnant economic growth—is now looming large over the American economy, according to leading economist Savvas Savouri of QuantMetriks. In a sharply worded warning, Savouri cautioned that the U.S. is on the cusp of a stagflationary era fueled by a weakening U.S. dollar, escalating tariffs, and labor shortages triggered by tighter immigration argues that the Federal Reserve may soon be forced into a difficult position: unable to aggressively cut interest rates due to persistent inflation, yet needing to respond to economic of the clearest signals of this looming stagflation, according to Savouri, is the decline of the U.S. dollar. As the U.S. imposes new tariffs and pulls back on global trade engagement, demand for the dollar as a global reserve currency could wane. This devaluation is already being felt in currency markets, where the dollar index has dipped recently, signaling reduced investor confidence.A weaker dollar typically drives up the price of imported goods, pushing inflation even higher—exactly the kind of cycle that defines also warned of a steepening U.S. Treasury yield curve, a classic signal of economic stress. This steepening reflects higher long-term interest rates compared to short-term ones, as investors demand greater returns to offset future inflation could signal that markets no longer believe the Federal Reserve can keep inflation under control, potentially destabilizing the traditionally 'safe' bond market. In turn, this shift could impact everything from mortgage rates to corporate borrowing inflation expected to stay high and the dollar under pressure, Savouri is advising investors to consider inflation-protected assets. His top recommendations:These hedges may become essential tools for both institutional investors and average savers looking to protect the real value of their won't hit all stocks equally. According to Savouri, large-cap technology companies like Apple, Microsoft, and Alphabet may weather the storm better than others due to their global revenue base and pricing power. Their ability to pass costs onto customers, invest in productivity-boosting AI, and maintain strong margins gives them a clear the other hand, small- and mid-cap companies, especially those that are U.S.-focused and labor-intensive, could struggle. With slower growth and tighter consumer spending, these companies might face a double blow of rising costs and weakening appear to be waking up to this stagflation threat. On the same day Savouri's warning gained traction:This market response reflects growing uncertainty about the Fed's ability to navigate these conflicting economic average Americans, the risk of stagflation means higher prices at the store, potential job insecurity, and lower real returns on traditional investments like bonds or savings accounts. For policymakers, it presents a double bind: interest rate cuts may spur growth but worsen inflation; hiking rates might curb inflation but kill message is clear: this is not a drill. The U.S. must confront serious structural challenges—including its trade posture, labor policies, and monetary strategy—if it hopes to avoid the prolonged pain of signs of stagflation in 2025 are becoming harder to ignore. With inflation staying stubborn, economic growth slowing, and markets beginning to react, investors and households alike should review their financial hard assets, and inflation-linked securities may be more important now than ever. And for those managing large portfolios or retirement savings, understanding the implications of stagflation will be critical in navigating what could become one of the most challenging macroeconomic periods in recent U.S. means high inflation and slow economic growth happening at the same time in the TIPS, and the Australian dollar are strong hedges during stagflation.
