HSBC-全球投資策略：多資產投資方向-2021.5.18-43正式版

18May2021

Crunchtime

Multi-Asset

Global

Multi-AssetDirection

We’veconsistentlystressedthatbymid-Q2weshouldseepeakgrowtheuphoriaandmaximuminflationconcerns

Weseelittletochangethisview–thereareseveralmacroreasonswhycyclicalassetscouldfaceatoughersummer

WethereforereduceourOWinequitiesandcyclicals,cutoiltoUW,andaddtocarryasaprolongedsell-offisunlikely

Ourviewhasbeenfirmlyrisk-onduringthebase-effect-drivenreflationmaniathatweexpectedasearlyaslastyear(seeAglimpseinto2021,20Oct2020andStaywithme,20Apr2020).Butwe’vealsoalwayssaidthatwe’dlooktofadethisreflation-drivenrallyfrommid-Q2onwards.That’snow.Sonaturallyweneedtoaskourselves:isthatstillthecaseordoweneedtochangeourview?

We’darguethatparticularlythemacroandfundamentaloutlookhasseenitspeaknow.Weseeseveralfactorsfromamacroperspectivethatargueinthesamedirection.Atthesametime,theoutlookforstimulusandliquidityhasn’tdeterioratedsosignificantlyforustobeoutrightbearishonriskassets.Neitheraresentimentandpositioningparticularlyextreme–therearesomepocketsofexuberance,butforaprolongedrisk-offperiodwe’dneedmorebroad-basedenthusiasm.

So,wefadethereflationtradeandtakesomeriskoffthetable:wecuttheoverweightinenergytounderweight,andslashourpronouncedoverweightinequities.Atthesametime,wethinkmarket-basedinflationexpectationsshoulddeclineinthecomingmonthsandstarttoweighoncyclicalassets–consequentlyweaddtoDMsovereigns.Givenwedon’texpectapronouncedanddurablerisk-offperiodoverthesummerthough,weputmorefocusoncarryassetclasses,beingoverweightHYcredit,IGcreditandEMhardcurrencydebt.Inanenvironmentofsuper-flushliquidity,westillseeverylittlevalueinholdinghighlevelsofcashreserves.

MaxKettner*,CFA

Multi-AssetStrategist

HSBCBankplc

maximilian.l.kettner@

+442079915045

EdwardParker*

Multi-AssetStrategist

HSBCBankplc

edward.parker@

+442033597563

DuncanToms*

FixedIncome&Multi-AssetStrategist

HSBCBankplc

duncan.toms@

+442079913025

MarkMcDonald

HeadofDataScienceandAnalytics

HSBCBankplc

mark.mcdonald@

+442079915966

ShivaJoon

DataScientist

HSBCBankplc

shiva.joon@

+442079911356

Elevatedgrowthexpectationsleaveslittleroomforequitiestorisesignificantlyfurther

70

30

60

20

50

40

10

30

0

20

10

-10

0

-20

2010

2012

2014

2016

2018

2020

ConsensusGDPforecastdiffusionindexEquitiesvsUSTreasuries(26wchg,RHS)

Source:HSBC,Bloomberg

Commoditiesatriskshouldgrowthmomentumshifttoservices

8

50%

4

30%

0

10%

-4

-10%

-8

-30%

-12

-50%

2000

2003

2006

2009

2012

2015

2018

2021

ISMmanufacturingminusservices(4mlead)

Globalcommodities(%y/y,RHS)

Source:HSBC,Bloomberg

JayasankarMallisetty*

Associate

Bangalore

Disclosures&Disclaimer

ThisreportmustbereadwiththedisclosuresandtheanalystcertificationsintheDisclosureappendix,andwiththeDisclaimer,whichformspartofit.

Issuerofreport:HSBCBankplc

ViewHSBCGlobalResearchat:

Multi-Asset●Global

18May2021

Assetallocation

HSBCmulti-assetweightings*

AssetClass

Strategicweight

Activeweight

ChangesincelastMADRiskbudget

GlobalSovereigns

25.0%

1.0%

↑

US

9.8%

1.0%

↑

Eurozonecore

4.4%

-1.0%

?

GovernmentBonds

Eurozonenon-core

3.0%

1.0%

↑

UK

1.3%

0.0%

?

Japan

2.3%

-1.0%

?

EMhardcurrency(EMEXD)

2.1%

2.0%

?

EMlocalcurrency(EMLCD)

2.1%

-1.0%

?

GlobalIGcorpcredit

10.0%

1.0%

↑

USDIG

7.4%

0.0%

↑

Credit

EURIG

2.6%

1.0%

↑

GlobalHYcorpcredit

5.0%

1.0%

?

USDHY

4.1%

0.0%

?

EURHY

0.9%

1.0%

?

GlobalEquities

50.0%

2.0%

↓

DMequities

43.8%

2.0%

↓

US

31.3%

4.0%

↑

Equities

Japan

4.4%

-2.0%

↓

Eurozone

5.3%

-1.0%

?

UK

2.9%

1.0%

?

EMequities

6.2%

0.0%

↓

Commodities(broad)

5.0%

-1.0%

↓

Commodities

Oil(WTI)

2.8%

-1.0%

↓

Gold

2.2%

0.0%

↑

Cash

Cash(1M)

5.0%

-4.0%

?

Source:Bloomberg,FTSERussell,FactSet,HSBC;*foradescriptionofourstrategicassetallocation,seeTimetosellriskassets,4Nov.Pleasealsoseetheappendixfordetailsonhowourtacticalmulti-assetallocationrelatestotheviewsfromoursingle-assetclassstrategists.

Activeweightings

4%

GovernmentBonds

GlobalIGcredit

GlobalHYcredit

2%

0%

-2%

Currentmonth

Lastmonth

-4%

US

Eurozone

EurozoneUK

Japan

EMhard

EMlocalUSDIGEURIG

USDHYEURHY

core

non-core

currency

currency

Source:HSBC

Activeweightings

6%

Equities

Commodities

Cash

4%

2%

0%

-2%

-4%

Currentmonth

Lastmonth

-6%

US

Japan

Eurozone

UK

EM

Oil(WTI)

Gold

Cash(1M,

USD)

Source:HSBC

2

Multi-Asset●Global

18May2021

Globaldirection

Afterbeingfirmlyrisk-oninthepastcoupleofmonths…

…wereduceouroverweightinequitiesandotherriskassetclasseslikeenergy…

…asQ2islikelygoingtomeanpeakreflationandgrowthoptimism

Fadereflation–focusoncarry

Therehavebeenafewcracksemergingamongriskassetslately.Despiterecord-highornearrecord-highearningsbeatsintheUS,EuropeandAsia,globalequitieshavebeenroughlyflatsinceourlastMAD(chart1).DMsovereignshavebeenprettyunaffectedbyallofthis–beitbetterorworseUSactivitydataortheintermittentdeclinesinglobalequities.Creditspreadshavesimilarlybeenlargelyrange-bound.

1.PerformanceacrossassetclassessinceourlastMAD

Source:HSBC,Bloomberg,RefinitivDatastream,Factset,*7-10yearindices;Note:Totalreturninequitiesmeasurespriceappreciationanddividendpayments.Totalreturninfixedincomemeasurespriceappreciation,accrual,andcouponpayments.

Themainstoryhashappenedbelowthesurfacethough:thecontinuedreflation-drivenrotationwithinassetclasses.Assuch,commoditiespoweredahead,asdidcyclicalequitysectors,andmarket-basedinflationexpectations.

We’veconsistentlysaidthatwe’dlooktofadethisreflation-drivenrallyfrommid-Q2onwards.That’snow.Soisthereenoughtochangeourview?Wedon’tthinkso–inparticular,thereareseveralmacrofactorsthatstillargueforthesameview–tofadethecyclicalandreflationtrade.

3

Multi-Asset●Global

18May2021

Ourframeworkisdictatedbyourviewson1)macroandfundamentaloutlook,2)outlookonstimulusandliquidityand3)sentimentandpositioning.We’darguethatparticularlythemacroandfundamentaloutlookhasseenitspeaknow.Atthesametime,theoutlookforstimulusandliquidityhasn’tdeterioratedsosignificantlyforustobeoutrightbearishonriskassets.Neitherissentimentandpositioningparticularlyextreme–therearesomepocketsofexuberance,butforaprolongedrisk-offperiodwe’dneedmorebroad-basedenthusiasm.

So,wefadethereflationtradeandtakesomeriskoffthetable:wecuttheoverweightinenergytounderweight,andslashthepronouncedoverweightinequities.Atthesametime,wethinkmarket-basedinflationexpectationsshoulddeclineinthecomingmonths

–consequentlyweaddtoDMsovereigns.Givenwedon’texpectapronouncedanddurablerisk-offperiod,weputmorefocusoncarryassetclassesduringthesummer,beingoverweightHYcredit,IGcreditandEMhardcurrencydebt.Inanenvironmentofsuper-flushliquidity,westillseeverylittlevalueinholdinghighlevelsofcashreserves.

Macroandfundamentals

Thisisthepillarinourframeworkthatcouldseethemostchangesinthenextcoupleofmonths.

Hence,weputaparticularfocusonthemacroandfundamentaloutlookrightnow.

Wehaveseen1)verypositiveactivitysurprisesparticularlyintheUS,2)increasinglysynchronisedgrowthacrosstheglobe3)supplysidebottlenecksandhighercommodityprices,and4)reflation,bealltherageinthepastfewmonths.Belowareacoupleofthoughtsonallofthisandwhatitmeansfortacticalassetallocation.

Activitysurprisesandsynchronisedgrowth

Startingwiththegrowthsideofthings,ourglobalPMImodelbasedonacombinationofseveralneworders/inventorieshasgivenussomeprettygoodguidanceinthepastfewmonths.ButevenmoreupsideintheglobalmanufacturingPMIsnowseemsquiteunlikely,basedonthis.

2.GlobalmanufacturingPMIandnewordersvsinventories

58

2.2

56

55

1.4

54

0.6

53

52

-0.2

50

-1.0

51

48

-1.8

46

-2.6

49

44

-3.4

47

42

-4.2

40

-5.0

45

2004

2007

2010

2013

2016

2019

2010

2013

2016

2019

GlobalmanufacturingPMI

Neworders-inventories(RHS;US,EZ,TW,SWE;3mlead)

Source:HSBC,Bloomberg,RefinitivDatastream,Markit

1.4

0.9

0.4

-0.1

-0.6

-1.1

-1.6

-2.1

-2.6

We’venotedseveraltimesalreadythat,particularlyintheUS,activitysurpriseshavebeenonatearinthepasttwelvemonths(chart3).WhilsttheextentofactivitysurpriseshasbeenespeciallypronouncedintheUS,thebreadthofsurpriseswasactuallyextremelyhighacrosstheglobe(chart4).

4

3.Record-highUSactivitysurprises

200

100

150

80

60

100

40

50

20

0

0

-20

-50

-40

-60

-100

-80

Jan-01

Jan-05

Jan-09Jan-13

Jan-17Jan-21

EurozoneActivity

USactivity(RHS)

Source:HSBC,Bloomberg

Multi-Asset●Global

18May2021

4.Highbreadthofglobalactivitysurprises

0

80

60

40

20

0

Jan-17 Jan-18 Jan-19 Jan-20 Jan-21

DiffusionindexHSBCActivitySurprises(60-daychange)

DiffusionindexHSBCActivitySurprises(40-daychange)

Source:HSBC,Bloomberg

Butofcoursewe’veseensomecrackslately,mostnotablytheworse-than-expectedNFPsandISMs.PMIshavetendedtopeakfirstaroundninemonthsafterarecessionends(chart5).That’sprettymuchwhereweareatrightnow.

5.ISMtendstopeakaroundninemonthsafterarecession–isthistimereallydifferent?

80

70

?

60

50

40

30

20

1948

1953

1958

1963

1968

1973

1978

1983

1988

1993

1998

2003

2008

2013

2018

USrecession

ISMmanufacturingPMI

Postrecessionpeak

Source:HSBC,Bloomberg

Sowecheckedwhattheforwardperformanceofvariousassetclasseshasbeenlikefollowingtheseinitialpost-recessionpeaksintheISM(chart6).Equitiestypicallystrugglealittle,withcyclicalregionslikeJapanortheEurozoneunderperforming.Commoditiesalsotendtounderperform.USTsaredoingmuchbetter.Particularlysincethe1990s,yieldsatthelongendhavetypicallyseensharpdrops.Carry(IG/HYcredit)seemstobeinvoguetoo.

6.Afterthesepost-recessionpeaks,riskassetstendtostruggle–carry&USTsdowell

20%

Performanceafter

15%

initialpost-recession

peakinISM

10%

5%

0%

-5%

SPX

UST

IG

HY

Comm.

DXY

3mpostpeak

6mpostpeak

12mpostpeak

Source:HSBC,Bloomberg

5

Multi-Asset●Global

18May2021

Onaggregate,fallingPMIshavehistoricallyalsobeenanindicatorofprettypoorperformanceofriskassets(likeequities,orHYvsIGcredit)andstrongperformanceofDMsovereigns(USTs).

Italsotypicallydoesn’tmakeabigdifferencewhetherthelevelsarestillhighwhenthePMIsarefalling.Forthis,we’vealsolookedattheperformanceofequities,USTs,andHYvsIGcreditwhentheISMwasrising/declininginarangeof55-60.Butregardlessofthestillelevatedlevels–riskassetstendtostruggleandUSTreasuriestendtodobetter(charts7-12).

7.USTperformancewhenISMrises/falls…

8.…andwhenISMisbetween55and60

800

135

USTreasuries

130

USTreasuries

700

125

600

120

500

115

400

110

300

105

200

100

100

95

0

90

78

81

84

87

90

93

96

99

02

05

08

11

14

17

20

78

81

84

87

90

93

96

99

02

05

08

11

14

17

20

whenPMIisrising

whenPMIisfalling

whenPMIisrising

whenPMIisfalling

Source:HSBC,Bloomberg

Source:HSBC,Bloomberg;

9.SPXperformancewhenISMrises/falls…

10.…andwhenISMisbetween55and60

1000

400

S&P500

350

S&P500

800

300

600

250

400

200

200

150

100

0

50

70

75

80

85

90

95

00

05

10

15

20

70

75

80

85

90

95

00

05

10

15

20

whenPMIisrising

whenPMIisfalling

whenPMIisrising

whenPMIisfalling

Source:HSBC,Bloomberg

Source:HSBC,Bloomberg

HYvsIGperformancewhenISMrises/falls…

200

USDHYvsIG

175

150

125

100

75

50

84 87 90 93 96 99 02 05 08 11 14 17 20

whenPMIisrising whenPMIisfalling

Source:HSBC,Bloomberg

12.…andwhenISMisbetween55and60

135

USDHYvsIG

120

115

110

105

100

95

90

84 87 90 93 96 99 02 05 08 11 14 17 20

whenPMIisrising whenPMIisfalling

Source:HSBC,Bloomberg

6

Multi-Asset●Global

18May2021

Allofthisisofcoursealsorelatedtothemuchhighergrowthexpectationsnow.Forexample,theISMmanufacturingindexwasstillinthesecondpercentileofthepastthirtyyears,butatthesametimeposteda2.2standarddeviationnegativesurprise!

Thisisexactlytheissueforthecomingmonths:consensusexpectationshavingrisensomuch,thatactivitysurprisesareincreasinglyatriskofbecomingnegative.

Admittedly,we’vebeenarguingalongthoselinesforacoupleofmonthsalready–withoutreallybackingitupwithparticularlystrongevidence.That’swhythismonthwefocusedspecificallyontheinteractionbetweengrowthexpectationsandsurprises.

Chart13showsthe6MchangeofUSactivitysurprisesandconsensusexpectationstwoquartersahead.Evidently,thereissomeverystrongco-movementbetweenthesetwo.Inessence,oncebothsurpriseshavebecome(too)strongandconsensusgrowthexpectationstwoquartersahead(too)high,theseareverylikelytomean-revert.

13.USactivitysurprisesheavilyintertwinedwithtwo-quarteraheadgrowthexpectations

1.5

60

8

120

1.0

40

6

90

4

60

0.5

20

2

30

0.0

0

0

0

-0.5

-20

-2

-30

-4

-60

-1.0

-40

-6

-90

-1.5

-60

Jan-20

Jul-20

Jan-21

Twoquartersaheadgrowthdata(6m

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

change)

Twoquartersaheadgrowthdata(6mchange)

USActivitysurprise(6mchange,RHS)

USActivitysurprise(6mchange,RHS)

Source:HSBC,Bloomberg

Andthismattersgreatlyforassetallocation.We’veshownnumeroustimesalreadyhowchangesinsurprisesareintertwinedwithearningsrevisions.Theseinturnareheavilycorrelatedwiththeperformanceofequitymarkets(seeStaywithme,20Apr2021).Inaworldsoheavilydrivenbyrisk-on/risk-offconsiderations,theresultingstrengthorweaknessinequitiesveryoftenspillsovertoFX,creditandotherassetclassesaswell.

Growthexpectationsarekeythen:onceconsensusextrapolatestherecentstrengthinthedatatoomuch,activitysurprisestendtostartrollingover.Soinordertogaugethebreadthofconsensusexpectations,weconstructedaglobaldiffusionindexoftwo-quarteraheadconsensusgrowthexpectations.

Chart14belowshowsthisdiffusionindex.Specifically,wecomputethefour-weekchangeoftwo-quarteraheadconsensusGDPgrowthexpectationsforthelargestdevelopedmarketeconomies.

7

Diffusionindexoftwo-quarteraheadconsensusDMGDPgrowthexpectations

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20

10

0

2010

2012

2014

2016

2018

2020

ConsensusGDPforecastdiffusionindex

Source:HSBC,Bloomberg.Note:Calculated4-weekchangeoftwo-quarteraheadconsensusGDPgrowthexpectationsfortheUS,UK,Japan,Canada,Australia,andCore&Non-coreEurozonecountriestoconstructadiffusionindex.Avalueabove50indicatesthatthenumberofcountrieswithincreasingGDPgrowthexpectationsisgreaterthanthenumberofthosefalling.Weshowthisasrollingquarterlyaverage

Multi-Asset●Global

18May2021

DiffusionindexvsglobalequitiesoverUSTreasuries(7-10Y)

70

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30

0

20

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-10

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-20

2010

2012

2014

2016

2018

2020

ConsensusGDPforecastdiffusionindexEquitiesvsUSTreasuries(26wchg,RHS)

Source:HSBC,Bloomberg

Thisdiffusionindexshowsthatconsensusincreasinglyexpectsbettergrowthacrosstheglobe.Whatmattersmosttous,however,ishowthisislinkedtofinancialmarkets.Andwhatwefindisthatafterthemajorityofconsensusexpectationshavealreadybeenrevisedhigher,equitiestendtodoratherpoorlyvsDMsovereigns(chart15).

Wefindsimilarbehaviourinotherassetclassesaswell.Forexample,charts16and17belowshowtherelativeperformanceofHYvsIGcreditandofrisk-onG10FX.Again,thelowerconsensusgrowthexpectationsare,thebetterforwardreturnstendtobeforrisk-onFXandHYvsIGcredit(andviceversa).

DiffusionindexvsHYoverIG(TR)

70

60

50

40

30

20

10

0

2010

2012

2014

2016

2018

2020

ConsensusGDPforecastdiffusionindex

USDHYvsIG(26wchg,RHS)

Source:HSBC,Bloomberg

9

6

3

0

-3

-6

-9

17.Diffusionindexvsrisk-onFX

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-5

10

-10

0

-15

2010

2012

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2016

2018

2020

ConsensusGDPforecastdiffusionindexAUD,NOK,CADvsJPY(26wchange,RHS)

Source:HSBC,Bloomberg

Soallinall,afterhavingseenastreakofupwardrevisionsinconsensusgrowthexpectationsacrosstheglobe,thissuggestsweshouldtakesomeriskoffinourmulti-assetallocation.

Inparticular,wethinkH2isgoingtobeallaboutatransitionfromanearly-cycleenvironmenttoamid-cyclebackdrop.Sonotonlyarewereducingriskinourallocation,butwe’dalsostarttofadethereflation-drivenrallyincyclicalsandvaluemoreexplicitly.

Itisbecomingincreasinglyclearthatgrowthmomentumisshiftingawayfrommanufacturingtoservices,andfromEMtoDM.Ifthiswastocontinuefurther,itwouldn’tbodewellforthemore

8

Multi-Asset●Global

18May2021

cyclicalpartofriskassetseither:incharts18-23weshowthegapbetweenthemanufacturingandnon-manufacturingISMscomparedtovariouscyclicalassetclasses.Longstoryshort:atransitionfrommanufacturingtoservicesinglobalgrowthmomentumwouldlikelyseethereflationdarlingsstruggle,suchascyclicalvsdefensiveequities,EMvsDMequities,orcyclicalcommodityprices.

ISMmanufacturing-servicesgapvscyclical/defensiveequities

8

30%

6

20%

4

2

10%

0

0%

-2

-4

-10%

-6

-20%

-8

-10

-30%

2002

2005

2008

2011

2014

2017

2020

ISMmanufacturingminusservices(2mlead)

Globalcyclicalsvsdefensives(%y/y,RHS)

Source:HSBC,Bloomberg,FTSERussell,FactSet

ISMmanufacturing-servicesgapvsEMequities

8

80%

4

0

40%

-4

0%

-8

-40%

-12

-80%

2000

2003

2006

2009

2012

2015

2018

2021

ISMmanufacturingminusservices(1mlead)

EMequities(%y/y,RHS)

Source:HSBC,Bloomberg,FTSERussell,FactSet

ISMmanufacturing-servicesgapvsEM/DMequities

9

30%

6

3

15%

0

0%

-3

-6

-15%

-9

-30%

2002

2005

2008

2011

2014

2017

2020

ISMmanufacturingminusservices

EMvsDMequities(%y/y,RHS)

Source:HSBC,Bloomberg

ISMmanufacturing-servicesgapvsbroadcommodities

8

50%

4

30%

0

10%

-4

-10%

-8

-30%

-12

-50%

2000

2003

2006

2009

2012

2015

2018

2021

ISMmanufacturingminusservices(4mlead)

Globalcommodities(%y/y,RHS)

Source:HSBC,Bloomberg

22.ISMmanufacturing-servicesgapvsoil

23.ISMmanufact.-servicesgapvscopper

8

8

100%

80%

4

4

60%

40%

0

0

0%

20%

-4

-4

-8

-40%

-8

-20%

-12

-80%

-12

-60%

2000

2003

2006

2009

2012

2015

2018

2021

2000

2003

2006

2009

2012

2015

2018

2021

ISMmanufacturingminusservices

ISMmanufacturingminusservices

CrudeOilWTI(%y/y,RHS,4mlag)

Copper(%y/y,RHS,1mlag)

Source:HSBC,Bloomberg

Source:HSBC,Bloomberg

9

Multi-Asset●Global

18May2021

Wewonderwhetherhistorycouldinfactrepeatitselfagain:signsofyetanothersupercycleincommoditiesandasynchroniseduptickinglobalgrowthweregrosslymisinterpretedrightafterthefinancialcrisis.Asaresult,theperformanceofriskassetswasprettylacklustrein2011andlargepartsof2012.Nextyearcouldindeedbringasimilarenvironment,withperhapshighertaxesandQEtaperingintheUS,lowerbaseeffects,risingpoliticalriskinEurope,andslowercreditgrowthinChina–butconcurrentwithmuchgreaterexpectations.

Ofcourse,thistimecouldbedifferent.Loftyexpectationsmaystillprovetobesubduedrelativetotheimpetusfromstimulusandthevastpent-updemand.Yetwequestionhowmuchofthispent-updemandislefttobereleased,particularlyintheUS.Thoselookingforafurtherpersistentreleaseofpent-updemandmaysuggestfurthervaccinationscouldpavethewayforincreasedmobilityandultimatelyhigherspending.

However,chart24showsthatthosestatesthathavehadalowervaccineuptakearealreadyspendingsimilaramountsoftimeawayfromhomeaspriortoCOVID-19.Andifanything,vaccineuptake,mobility/spendingseemtoberelatedmoretopoliticsandincome,ratherthantheseverityofCOVID-191.Ifthatisindeedthecase,thenpent-updemandcouldbemuchlesspersistent,eveninthefaceofasignificantlyimprovedsituationaroundCOVID-19.

24.VaccinevsmobilitybyUSstate

Source:HSBC,OpportunityInsights;Note:statebubblesizereflects2019population.VaccinepercentreflectsthepercentofpeoplewhohadreceivedatleastonevaccinedoseagainstCOVID-19.

______________________________________

Seealso/2021/05/12/vaccinated-unvaccinated-americans-comfort-with-activities/andWho’s

ReadytoSpend?ConstrainedConsumptionacrosstheIncomeDistribution,NYFed,13May2021

10

Multi-Asset●Global

18May2021

Supply-sidebottlenecks,highercommoditypricesandreflation

Sofarwe’veonlyfocusedonthegrowthsideoftheequation.Ofcoursethere’salsobeenanawfullotoftalkaroundrisinginflation.Indeed,discussionsaroundsupplysideissues,shortagesonthesupplysideandinflationinUSearningscallshavepickedupsignificantlyrecently(charts25-28,seeWhithertheUSearningsbonanza,04May2021).Supplysideshortagesareamajorthemetoo(chart26).Butdotheseshortagesreallyleadtoalonger-terminflationarythreat?

25.Supplychainissuesafrequent 26.…butsentimentisstillfairlyupbeat

discussiontopicsinearningscallsnow…

Source:FTSERussell,RefinitivTRKD,Factset,Bloomberg,HSBC

Shortagesonthesupplysideareamajorthemerightnow

Source:FTSERussell,RefinitivTRKD,Factset,Bloomberg,HSBC

Source:FTSERussell,RefinitivTRKD,Factset,Bloomberg,HSBC

InflationhasbeendiscussedmorefrequentlyinUSearningscalls

Source:FTSERussell,RefinitivTRKD,Factset,Bloomberg,HSBC

We’dnotethattheUSlooksalittlelikeanoutlierwithregardtopassingoninputcoststohigheroutputprices(chart29).Therelationshipbetweenhighersupplierdeliverytimesandthemarkupofoutputvsinputpricesisalsoprettyloose(chart30).Morespecifically,oureconomistshavealsofoundnostatisticallysignificantrelationshipbetweenconsumerpricesandthingslikehighershippingfreightrates(seeEurozoneinflationbriefing,16Apr2021andKeepingtrademoving2021,06May2021).

11

USisabitofanoutlierwhenitcomestoinputvsoutputprices

5

US

21)

4

IT

ESKR

PD

EUIRBR

FRNT

(Apr

3

TW

CZ

RU

prices

DE

AU

UK

2

Output

TU

CN

1

IN

JP

0

0

1

2

3

4

5

Inputprices(Apr21)

Source:HSBC,Bloomberg.Note:Z-scoreshavebeencalculatedsinceJan2010.

Multi-Asset●Global

18May2021

Thereisonlyalooserelationshipbetweensupplierdeliverytimesandmarkup

2

y=0.1508x+0.1828

21)

R2=0.1538

TW

US

IT

(Apr

1

RU

EU

ES

prices

BR

TU

KR

IR

FR

DE

PD

input

UK

NT

IN

0

CN

AU

-

Output

CZ

JP

-1

-2

0

2

4

6

Supplierdeliverytimes(Apr21)

Source:HSBC,Bloomberg.Note:Z-scoreshavebeencalculatedsinceJan2010.

Beyondthebase-effectandpent-updemanddrivenuptickininflationwearen’ttoo