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BentinPartner Weekly

Global markets remained caught in a tug of war between recession fears (a recession typically leads a 30% equity market drop) and a still strong technical and in most cases favourable trend picture.

Fundamentalists remained concerned by the inverted (and not yet dis-inverting) yield curve as a time-tested leading indicator of recession. They looked at the 7% 30Y US mortgage rates, which after doubling over the past 12 months, could still spell trouble for the US real estate market, albeit with a lag. Existing home sales are now clearly weakening, offsetting more than the increase in new home sales. The 16th consecutive decline in the US Conference board leading indicator which led to a recession 10 times out of 13 with various lag times also remained as a liability alongside the ongoing manufacturing recession.

That being said, the US economy still shows no decisive signs of landing as it remains supported by zooming government spending (the Inflation Reduction Act), the suspension of student loans debt and the remainder of the Covid extra savings. There is a difference to draw between an unsustainable fiscal path (leading to a fiscal cliff) and the near-term more favourable prospects of an economy boosted by yet another debt financed shot of government spending.

While US equity markets remained well supported, some hiccups emerged over the past two weeks with the US tech giants dropping mildly (GOOG, AMZN, Tesla dropped between 3 and 7% last week) as a result of a Nasdaq index rebalancing aimed at addressing the concentration issues that resulted from 6 stocks accounting for the vast majority of the index so far this year. This will likely crystalize Nasdaq gains but possibly also require some broadening of the rally to smaller names for the rally to continue. Some concerns also emerged with the earnings report of chip companies coming surprisingly weak last week, causing the sector to drop, despite the ongoing AI euphoria as the Chinese slowdown started to bite.

This weakness was sort of offset by US banks reporting mostly stronger than expected earnings (JPMorgan and BoA) last week with their biggest problem for now being to hide the extra profit they are making from the demise of regional banks earlier this year.

China’s economic surprise index (ESI) dropped to -88 (from +150 a few months ago) while the US ESI went in the other direction (from 0 to 75 over the same time frame) as Chinese economic data disappointed, in large part because of the US attrition policy towards China and some renewed pressure on Chinese real estate markets which are one more time leading to underperforming Chinese equity markets (the currency has recently stabilized and regained some poise on the back of supportive action by the PBOC).

From a purely technical view, the up-trend remained in place elsewhere for non-Chinese stocks.

Currency wise, after dropping 3% in July, the dollar index rebounded 1% last week, supported by the coming Fed tightening, and hints that the BoJ (formally meeting this week) still does not care much about where inflation stands or goes as it pertains to the conduct of monetary policy (The BoJ remains hopeful that other Central Banks will soon start easing again before they have to tighten or do anything which is weighed again on JPY last week) and some cautious words of ECB officials on the perspective for additional rate hikes.

Despite all the talks of topping inflation (and obscured base effects), oil and gas rallied some 7% last week with ags regaining their highest level since the beginning the war in Ukraine which will remain as a source of concern for food inflation.

Next week brings a Fed (Wed) and ECB (Thu) policy meeting which are both expected to lead to an additional 25bps tightening (and a focus on the perspective for additional tightening) with an avalanche of earnings reports also due in the US and Europe.


Over the past week, the S&P500 gained 0,6% (18,2% YTD) while the Nasdaq100 dropped -0,9% (41,1% YTD). The US small cap index gained 1,5% (11,5% YTD). AAPL gained 0,7% (47,7%).

Cboe Volatility Index gained 1,9% (-37,2% YTD) to 13,6.

The Eurostoxx50 dropped -0,2% (18,9%), underperforming the S&P500 by-0,8%.

Diversified EM equities (VWO) dropped -1,4% (6,1%), underperforming the S&P500 by-2,1%.

The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies gained 1,2% (0,5%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) dropped -0,4% (2,2%).

10Y US Treasuries were unchanged (-4bps) to 3,83%. 10Y Bunds dropped -4bps (-10bps) to 2,47%. 10Y Italian BTPs rallied -9bps (-64bps) to 4,08%, outperforming Bunds by -5bps.

US High Yield (HY) Average Spread over Treasuries dropped -3bps (-93bps) to 3,76%. US Investment Grade Average OAS dropped -2bps (-11bps) to 1,32%.

In European credit markets, EUR 5Y Senior Financial Spread dropped -1bps (-20bps) to 0,80%.

Gold gained 0,3% (7,6%) while Silver dropped -1,3% (2,8%). Major Gold Mines (GDX) dropped -1,5% (9,9%).

Goldman Sachs Commodity Index rallied 2,2% (-4,0%). WTI Crude rallied 2,2% (-4,0%).


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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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