Alpine Macro Research

Independent investment research.  Market insights & analysis.  Investment strategy & asset allocation recommendations.

Global Strategy

Like Father, Like Son?

June 24, 2019

The Fed’s dovish pivot last week will encourage risk-taking, but the ramp up in stocks may also complicate the timing of the Fed next action. We continue to advocate a barbell structure with good exposures to risks on one side, and long duration on the other. Finally, we reiterate our weak dollar call, upgrade EM to an overweight and recommend clients to buy gold and take a speculative position on Brent oil.

Global Strategy

Seven Steps And A Stumble? 

June 29, 2018

The MSCI All-Country World Equity Index has been stuck in a tight range since January of this year, but it now seems as if it is suspended on the brink of a sharp fall. With the Fed having already delivered seven rate hikes since January 2016, the central bank has become even more hawkish at a time of escalating trade tensions between the U.S. and its trading partners.

Global Strategy

Two Down, One To Go? 

December 14, 2018

For a mature, high-income economy, what would the natural equilibrium for nominal bond yields be? Japan has seen its government bond yields below 1% for more than two decades and at zero in recent years. It is very likely that eurozone bond yields will never get much above zero again either. U.S. 10-year Treasury bond yields could also gravitate towards zero during the next economic downturn.

Emerging Markets & China Strategy

EM Equity Allocation For Q4 

October 3, 2018

Overall, the country allocation recommendations are largely stable, but the dispersion between countries’ model weights and their benchmark weights has become smaller, especially for our less favored markets. For Q4 no country fits our criteria for the most bearish rating of “underweight”, i.e. 20% below benchmark weight for smaller markets and 10% below for larger ones.

Emerging Markets & China Strategy

China Reflation/Inflation Watch 

October 2, 2018

In the current environment where growth has been sluggish, however, it is highly unlikely that food inflation, even if it occurs, would lead to a broader inflationary pressure in the economy. In fact, our model predicts continued deceleration in producer prices. This means that deflation is a greater threat than inflation.

Emerging Markets & China Strategy

Turkey: An Atypical EM Crisis 

August 21, 2018

A critical feature in the ongoing Turkey crisis is that the lira is a free-floating currency, while previous EM banking crises induced by balance of payments difficulties were always associated with currency pegs. Turkish economy will suffer a dramatic growth slowdown, but a full-blown economic and banking crisis does not appear likely at the moment.

U.S. Themes & Strategy

Big-Picture Geopolitical Insights From Robert Kaplan 

September 11, 2019

Kaplan offers a historically informed, forward-looking roadmap for these shocks, both for the next year and the longer term. Among the conclusions for investors: Trump may stay tough on China for political reasons. For the first time since the 1970s, Asian security can no longer be taken for granted.

U.S. Themes & Strategy

Constructive On Treasuries and Oil 

March 19, 2019

Savings and investment trends both at home and abroad are good news for Treasuries and dividend grower equities. However, the next upleg in broad equity prices awaits a lower dollar and Fed rate cut, which will take time. Oil and energy stocks will fare well.

U.S. Themes & Strategy

Echoes of the 1990s: Tech Mania 

September 7, 2018

The tech sector shows obvious signs of too much money chasing too few opportunities, but the price appreciation has been less explosive than in the late 1990s. FAANG/M relative performance will be critical to monitor. One lesson from the late 1990s bubble is that Fed policy will influence the dynamics of the overshoot.

Global Fixed Income & Currency Strategy

Fixed Income & Currency Indicators 

September 6, 2019

The risk profile of U.S. Treasuries has deteriorated over the last month, but yields may still have more downside potential. Bond yields should continue to decline until policymakers have taken sufficient measures to improve the economic outlook.

Global Fixed Income & Currency Strategy

The Dollar Puzzle 

May 6, 2019

The Fed has created a shortage of dollar liquidity, which has been a factor behind the recent resilience of the greenback. The upward pressure on the dollar should alleviate as the Fed brings QT to an end and lowers short-term interest rates later this year.

Global Fixed Income & Currency Strategy

End Of The Line For The Bank Of Japan? 

March 1, 2019

The truth of the matter is that the BoJ has been tapering JGB purchases for over two years now. This shift has less to do with a desire to pare back the monetary stimulus. Rather, the change in the BoJ’s stance is driven by supply constraints. As hard as it may be for investors to believe, the BoJ is faced with a shortage of JGBs!