One of the common problems being a macro strategist is being accused of cherry-picking data to fit whatever narrative one is conveying at the time. Over the past two years, those with more negative view of the U.S. economy pointed to the depressing figures out of the industrial and cyclical sectors, while those with moreContinueContinue reading “All The Data in the World: Potential Recovery in Industrial Sector Amid Slowdown in Consumer Spending”
Category Archives: Research
Rotation Within and Across Asset Class
In our latest publication, we highlighted that the U.S. economy is potentially at a tipping point where financial conditions are set to tighten as inflation continues to fall and the Fed has been too hawkish relative to economic fundamentals. We wrote: Since July 11th – when U.S. CPI inflation data showed price pressure continues toContinueContinue reading “Rotation Within and Across Asset Class”
A Tale of Two Cities
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, itContinueContinue reading “A Tale of Two Cities”
Should The Fed Cut Policy Rate If U.S. Growth Remains Strong?
Exceptional U.S. growth continues to be seen in the last quarter of 2023 and beginning of this year, with Q4/23 reading shows the U.S. economy expanding 0.8% q/q (3.2% annualized), slightly higher than the 2% trend growth observed over the past two decades, while the rest of the world lagging. The Euro Area, Canada, andContinueContinue reading “Should The Fed Cut Policy Rate If U.S. Growth Remains Strong?”
Update on Equity Sector Outlook
The U.S. economy continues to show economic resilience, with GDP expanding 0.8% q/q (3.2% annualized) in the final quarter of 2023. It appears that resilience continues into the new year with the Atlanta Fed GDPNow currently pointing to a 2.8% q/q (annualized) expansion for the first quarter. In addition, ISM Manufacturing and Services PMI mayContinueContinue reading “Update on Equity Sector Outlook”
Fiscal Dominance, Softening Employment and Manufacturing Relapse
U.S. 10-year treasury yield rose significantly (+60 bps) in October amid strong Q3/23 GDP, reaching as high as 5%, before abruptly reversing this week following favourable treasury funding plan, lower-than-expected ADP employment and non-farm payrolls, and unexpectedly weak ISM manufacturing PMI. This trifecta of good news for bonds has translated to U.S. 10-year yield fallingContinueContinue reading “Fiscal Dominance, Softening Employment and Manufacturing Relapse”
The Big Picture: Economic Cycle and Market Mean-reversion
The structural decline in long-term yields since 1980 until the covid-19 pandemic had been accompanied by investors complaining that the search of attractive investment opportunities was becoming more difficult over time. The decline in borrowing cost also has a significant ramification for global investors, including boosting stock buyback amid lack of investment opportunities, breeding ofContinueContinue reading “The Big Picture: Economic Cycle and Market Mean-reversion”
Ten Predictions for 2023
This year has been particularly difficult for most investors as there are few places to hide from inflation and rising cost of capital. Both equity and long-term bonds are down over 20% YTD, and even the value of cash is being eaten out by inflation, which rose as high as 9.1% y/y back in June.ContinueContinue reading “Ten Predictions for 2023“
Lessons from Japan: Automation and Reshoring of Supply Chain
Download PDF: automation-and-reshoring-of-supply-chainDownload There are two main drivers of global deflationary trend in the past 30 years: rising global trade allowed by the shift towards greater openness in China and former Soviet countries and the explosion of productive-age population facilitated by the baby boomer generation (Chart 1). In 1989, the wage gap between the developedContinueContinue reading “Lessons from Japan: Automation and Reshoring of Supply Chain”
U.S. Equity Strategy: Sector Selection Amid Slowing Global Growth
Download PDF: us-equity-sector-strategyDownload The 2021 post-pandemic recovery has been impressive, with record amount of fiscal stimulus propping up household spending and the corporate sector turning into a capex hyperdrive. Meanwhile, the Fed maintained an ultra-loose monetary policy and tilted toward the dovish side in the first half of the year, which fuel the froth andContinueContinue reading “U.S. Equity Strategy: Sector Selection Amid Slowing Global Growth”
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