Research

Eight Things to Watch in 2026

This year has certainly been full of surprises for investors, with AI remaining the core equity investment theme. DeepSeek translated to a brief correction in the U.S. favorite AI names in February and March, followed by the U.S. tariffs announcement that escalated in April, then the U.S. bombing Iranian nuclear facilities in the summer, andContinueContinue reading “Eight Things to Watch in 2026”

Quantitative Sub-sector Rotation Strategy (QSRS)

Introduction Research shows that the equity market responds to macro news, with favorable macro news tend to be followed by increases in revenues, profits, and investment activities of companies (Modugno and Palazzo, 2024). In the study, the authors concluded that macro surprises could explain up to 34% of the S&P 500 return variation – highlightingContinueContinue reading “Quantitative Sub-sector Rotation Strategy (QSRS)”

Twelve Questions on Top of Mind

It’s summertime and volatility in the financial market has been relatively muted compared to what we saw earlier this year. Indeed, summertime has historically been a period of relative quiet in the market before volatility started to pick up in September and October (Chart 1). For macro strategists, this is the perfect time to reflectContinueContinue reading “Twelve Questions on Top of Mind”

Higher Risk Premium on U.S. Assets and Fiscal Math

For the past fifteen years, U.S. assets are the only thing that matters. Foreign investors require little risk premium for investing in U.S. government bonds, which was and still is de facto safe-haven assets, and bid valuation for U.S. stocks higher. As we will discuss in the second part of this piece, comparable sector valuationContinueContinue reading “Higher Risk Premium on U.S. Assets and Fiscal Math”

Global Growth Convergence in the Making (Part II)

One of the themes that could be observed in both the global equity and bond market is the convergence between U.S. and the rest of the world. Following two years of strong U.S. economy and weak growth in the rest of the world, we have seen U.S. exceptionalism start to diminish amid continued softening inContinueContinue reading “Global Growth Convergence in the Making (Part II)”

Zeitenwende (Turning Point): Improving RoW, Tariffs Implication and Equity Strategy

Olaf Scholz, the current Chancellor of Germany, delivered his “Zeitenwende” speech on 27th February 2022, following Russian invasion of Ukraine three days earlier, describing the event as a historic turning point for the country and took the opportunity to announce EUR 100 billion fund for German military spending – reversing the country’s lackluster defense spendingContinueContinue reading “Zeitenwende (Turning Point): Improving RoW, Tariffs Implication and Equity Strategy”

This Time It’s Different?

It is often said that the invention of steam engine in the 18th century was one of the world’s greatest inventions in the past one thousand years. The printing press, electric lightbulb, vaccination, and computer are also among the top of the list. These inventions are considered great not solely due to their direct usageContinueContinue reading “This Time It’s Different?”

2025: On Top of Mind

With the benefit of hindsight, 2024 turned out to be a much better year for investors compared to the relatively downbeat expectations earlier in the year. The U.S. stock market continued to roar, delivering 20%+ return, following a 22% return in 2023. Meanwhile, returns for fixed income also turned positive as global central banks startedContinueContinue reading “2025: On Top of Mind”

Beyond the Headline Numbers: The Best and Worst of Time

Over the past two years we have seen diverging takeaways from various macroeconomic indicators that worked well in the past. Indicators of consumer sentiment are downbeat, but overall consumer spending has been strong. In the Canadian province where I currently live, Ontario, slightly over one million people visited a food bank between April 2023 andContinueContinue reading “Beyond the Headline Numbers: The Best and Worst of Time”

The Touchdown: Tailwinds from Rate Cuts and Chinese Policy Stimulus

With less than three months to the end of the year, returns so far in 2024 is set to be among one of the best in recent years. The fear that the U.S. and global economy will go through a deeper slowdown amid the most aggressive monetary policy tightening in four decades has been quashed,ContinueContinue reading “The Touchdown: Tailwinds from Rate Cuts and Chinese Policy Stimulus”