Chris Watling

Chris
Watling

CEO & Chief Market Strategist
Longview Economics

Longview Economics, founded in 2003 by Chris Watling, is an independent research house based in London, providing three distinct yet interrelated groups of research products: Short and medium term market timing; Long term global asset allocation advice; and Global thematic, macro and commodities research.

Expertise

The historical logic behind tariffs

Chris Watling

Whilst the diagnosis of the driver of the deficit might be wrong, Trump' actions viewed through the lens of the history appear more logical. Indeed if the models of the rise and fall of Great Powers laid out by Paul Kennedy, Charles Kindleberger and more recently, by Professor Graham Allison... Show More

Australia: A canary in the coal mine

Chris Watling

Structurally, Australia’s growth model has been deteriorating for most of the past two decades and is now arguably one of the poorer examples in the developed world. In the years of the last commodity bull cycle, instead of saving in its ‘times of plenty’, Australia funded a large consumption and... Show More

Bitcoin & Copper – correlated!

Chris Watling

The explosion in money creation in China (and associated high credit intensity of GDP) has created a series of revolving bubbles around the economy. Here we look at where it is showing up. Show More

copper bitcoin

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The only four things that matter in the global economy

Chris Watling

Most of the time only a few things really matter with respect to the outlook for the global economy. If one can work out what those key debates are, and how they resolve themselves, then the asset allocation and investment decisions should fall out of that analysis. Show More

US Bond Yields Rallied 13% overnight. Here’s why.

Chris Watling

Sharp moves in US interest rate expectations, 10 year bond yields and consequently the dollar has brought about some significant rotation within global financial markets. That initial shift in US rate expectations, likely driven by last week’s Fed ‘DOTs’ signalling their clear intention to hike in December coupled with Yellen’s... Show More

Sector Switch: Out of Tech and into Financials

Chris Watling

US technology has been mentioned by fund managers as a crowded trade. Given its strong gains over the past 6 and 12 months, that’s perhaps not surprising. Earlier this week, we published a sector switch recommendation - ‘out of tech and into financials’. Show More

How much does geopolitics really matter for markets?

Chris Watling

Last Wednesday’s wobble sent market participants and commentators scrabbling for the history books. With reports that Trump asked ‘James Comey to end a probe into the former national security adviser’, geopolitics seemingly became front and centre of investors’ minds (with markets wondering about possible impeachment). Show More

Will China tighten further?

Chris Watling

China’s central bank balance sheet is the biggest central bank balance sheet in the global economy, and has been for several years. That reflects China’s two bouts of QE over the past 10 years. Initially China carried out a type of QE we label ‘FX QE’, i.e. from 2009 through... Show More

liquidity China qe markets macro national congress

What's driving the Aussie Dollar?

Chris Watling

Historically the Aussie Dollar has been regarded as a play on both commodities (specifically iron ore) and its higher interest rates relative to the rest of the world. In the past 12 months, though, the correlations of the currency with those two key factors has broken down. As iron ore... Show More

australian dollar aud australian economy

The oil market’s swing consumer

Chris Watling

A turn higher in oil prices in coming months and quarters, if forthcoming, should result in considerably weaker Chinese demand growth, as the authorities scale back their aggressive stockpiling policies. Weak underlying Chinese oil consumption, as well as high inventory levels, suggest that reduced stockpiling activity could be reasonably sharp.... Show More

oil China opec

Yields heading higher in early 2017

Chris Watling

US 10-year government bonds reached an all-time closing yield low on 8th July 2016 of 1.37%. That just surpassed the prior record low of 1.43% in July 2012 during the depths of the Euro crisis. Prior to that, US 10-year yields had only been meaningfully below 2% in one year... Show More

bonds yield chase Longform Macroeconomic

Gold: Relief rally, or new bull market?

Chris Watling

Gold prices are up 20% YTD, having almost halved over the past 4 years. Almost all this year’s price gain can be explained by investment flows. ‘Investment demand,’ including gold bars/coins, ETFs & OTC buying, doubled in H1 this year from average 2014 & 2015 level (fig 8). In contrast,... Show More

gold macroeconomics Longform

US inflation risk is building

Chris Watling

In the next 6 – 9 months, the US inflation outcome will be the key determining factor of both Fed policy and therefore the longevity of this US economic cycle. Current consensus expectations lean firmly towards a low inflation outcome and therefore a dovish Fed with continued, albeit low, economic... Show More

macroeconomics Longform US Inflation inflation risk

Brexit: Initial thoughts from the UK

Chris Watling

On Friday the UK has surprised markets by voting to leave the European Union (by 52% to 48%). Of the 12 regions of the UK – Northern Ireland, Scotland and London voted to Remain while the other 9 regions voted to Leave. The GB£ fell to an intra-day low of... Show More

Longform brexit

Regime shift or reflationary bounce?

Chris Watling

Only four months ago, markets were gripped by deflationary fear and the prospect of a US recession. The outlook has since brightened: asset prices have rallied, inflation readings have risen sharply, macro data has improved, and central banks have softened their tone. Is this a shift in US fundamentals, or... Show More

macro us economy

AUD rally looks overextended

Chris Watling

The recent rally in the Aussie dollar (up 13% from mid-Jan to mid-March) is overextended on a number of measures: Net speculative positioning has moved from markedly net-short to net-long; medium term AUD models are back on SELL, and price action is technically poor. The AUD looks set to retest... Show More

aud

The message from the banks

Chris Watling

Year to date, the worst performing major global sector is financials. This sector includes a number of subsectors but is dominated by the banks. The long-term share price behaviour of banks is particularly troubling. After marked weakness at the start of this year, many of the world’s largest banks share... Show More

banks macro

The bear market is not over yet

Chris Watling

Despite a strong rally from the lows in early February, global equities remain in a Bear Market. The rally from Feb 11th has the typical characteristics of many bear market relief rallies: equities have retraced approximately 65% of their prior losses. Our medium term (1 – 2 month) trading models... Show More

bear market

Time to hold cash again

Chris Watling

In our opinion, we’re in a cyclical bear market for global equities. The centre of the global challenges in this bear market is China (& surrounding, related EM economies). As such, while US equities are expected to trend lower, US government bonds are an attractive safe haven. We would also... Show More

bonds cash the buy side brief bear market

Credit boom has created vast swathes of unused assets

Chris Watling

China is the biggest risk for global markets at this current time. It’s clear that China has experienced a dramatic credit boom (since the GFC). Its commercial banks’ aggregated balance sheet has expanded dramatically in the past 7 years – i.e. from US$10 trillion to US$30 trillion today. Its debt... Show More

China macro the buy side brief Longform

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