Steve Donzé

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@steve_donze

Head of Investments | Pictet Asset Management Japan | 'Lag in Effect' of Global Liquidity | LSE PhD Alum

Tokyo am.pictet Joined July 2019

298 Following 11K Followers 677 Posts

Latest posts 5

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Steve Donzé @steve_donze Sep 8

The US is currently exhibiting classic mid-cycle dynamics.

It's noteworthy that current conditions almost exactly mirror 1997 when the Greenspan Fed enacted a single tap-on-the-brakes rate hike.

Steve Donzé Verified account @steve_donze Aug 31

Fed mid-cycle tightenings are rare birds. One example is March 1997, which fared much better than classic, end-cycle tightenings.

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Steve Donzé @steve_donze Nov 3

No matter how extraordinary the post-Covid cycle, the basic lead-lag relationships hold. Fed tightening shrinks valuation first and earnings with a lag. There are differences in degree. 2022 tightening was largest in decades, 2026's is a rate recalibration.

Steve Donzé @steve_donze Nov 2

Warsh Fed as most divided since Volker. Still early days.

Steve Donzé @steve_donze Nov 2

With one hike and one skip out of the way, the question is how much more rate recalibration does the US economy need.

All else equal, based on real-time estimates of Fed Financial Conditions Index, just one more hike would suffice.

Time to fade a protracted tightening cycle.

Steve Donzé Verified account @steve_donze Oct 29

Warsh: “While overall financial conditions are tighter, I'm unwilling and unable to call them tight.”

Getting close. All else equal, 2 more hikes would get Fed Financial Conditions Index net tight.

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Steve Donzé @steve_donze Oct 29

Warsh: “While overall financial conditions are tighter, I'm unwilling and unable to call them tight.”

Getting close. All else equal, 2 more hikes would get Fed Financial Conditions Index net tight.