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(Magic Carpet) (Hard or Soft) Landing...

BentinPartner Weekly

Higher yields caused a second week of losses for global equity markets, with tech losses leading the way as investors rotated towards the relative safety of value stocks (Berkshire Hathaway printed a fresh all time high).

US Inflation data were the key focus (for US markets) while weaker Chinese data and renewed concerns about home builder Country Garden weighed on Chinese stocks (not helped by President Biden calling Chinese leaders “bad folks”, China’s economic problems a “ticking time bomb” and China’s Belt and Road initiative, the “debt and noose”)

US CPI confirmed an expected improvement on reported inflation (mom 0.2% and yoy 3.2%) but the news was sold into with both bonds and stocks declining as investors took note that energy (and food) prices have been going steadily higher for a month, placing question marks on the benign inflation outlook if more structural issues do not help out (like contained wages). US five-year inflation breakeven also defied the optimism of the report, climbing to 2.5%, near the highs of April 2022.

Elsewhere in China, Country Garden missed a coupon payment of USD25mn due last Monday, leaving the company 1 month to pay before being officially called in default. The company’s July sales were down 60% from last year. A bailout remains possible while the Chinese government also works to ease off the local government debt situation by transferring part of their debt to the regions.

China’s CPI dropped for the first time since February 2021 by 0.3% yoy as the consumer sector continued to struggle while the PPI extended its recent decline in July. Chinese stocks dropped 3% on the week with CNY dropping 1% on the week as well.

Real estate woes are not a Chinese phenomenon. WSJ reported that some of the biggest names in commercial real estate lending have all but turned off the spigot, halting loans to any new project.

The US earnings season is poised to confirm earnings collectively fell for a third quarter by 5.2%.

All in all, the risk off sentiment dominated most of last week with internals deteriorating.

Gold still could not catch a bid as US yields rose and the dollar strengthened. That said, fundamentals of core demand continued to improve with China reporting it bought another 23 tons of gold last month (188 tons since November).

Silver and copper dropped with Goldman Sachs warning that Chinese copper inventories dropped to a critical level (all-time lows in relation to demand), suggesting supply constraints main soon take over the price action.

Global oil demand reportedly surged to a record, threatening to push prices higher according to the IEA.

The dollar was marginally higher on the week despite a majority of Fed officials opining the Fed may have reached the end of its tightening campaign, a view that we subscribe to.

The SEC is facing a litmus test with a barrage of bitcoin ETF’s to approve, delay or disapprove. It needs to conclude on the Bitwise Bitcoin ETP Trust by Sept. 1. Decisions for applications from BlackRock (now that L. Finck got convinced it is good idea), VanEck, WisdomTree and Invesco are due just a day later, with others following closely behind, Bloomberg reported.


Over the past week, the S&P500 dropped -0,3% (16,5% YTD) while the Nasdaq100 dropped -1,6% (37,5% YTD). The US small cap index dropped -1,6% (9,5% YTD). AAPL sold off by -2,3% (36,8%).

Cboe Volatility Index sold off by -13,2% (-31,5% YTD) to 14,84.

The Eurostoxx50 dropped -0,3% (17,2%), underperforming the S&P500 by-0,1%.

Diversified EM equities (VWO) sold off by -2,3% (4,7%), underperforming the S&P500 by-2,0%.

The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies gained 1,0% (2,7%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) dropped -0,5% (1,0%).

10Y US Treasuries underperformed with yields rising 12bps (28bps) to 4,15%. 10Y Bunds climbed 6bps (5bps) to 2,62%. 10Y Italian BTPs climbed 4bps (-46bps) to 4,25%, outperforming Bunds by -2bps.

US High Yield (HY) Average Spread over Treasuries dropped -17bps (-96bps) to 3,73%. US Investment Grade Average OAS climbed 0bps (-13bps) to 1,30%.

In European credit markets, EUR 5Y Senior Financial Spread climbed 1bps (-18bps) to 0,81%.

Gold dropped -1,5% (4,9%) while Silver sold off by -4,0% (-5,3%). Major Gold Mines (GDX) dropped -0,3% (2,8%).

Goldman Sachs Commodity Index gained 0,2% (-0,9%). WTI Crude gained 0,4% (3,7%).


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Marc Bentin serves as Economic Advisor to Blue Lotus Management,

a specialist multi-manager investment firm, which seeks to provide investors a compelling alternative to the traditional 60/40 equity and bond portfolio by targeting higher returns without amplifying equity risks.

BentinPartner GmbH is Advisor to the Phi Funds AIF, an umbrella Alternative Investment Fund registered and regulated in Lichtenstein, specializing in the management of Funds focused on physical precious metals.


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