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”
Tag Archives: earnings
Evidence, Dear Boy, Evidence
The resilience of the U.S. equity market despite falling fundamentals have continued to puzzle investors expecting lower stock prices. The S&P 500 has rallied 14% from its recent bottom in October, consumer discretionary has been outperforming staples for the past two months and sell-side analysts are sounding more bullish – with some pointing to theContinueContinue reading “Evidence, Dear Boy, Evidence”
An Update on Equity Sector
Market has been trading lower since mid-August peak and we are revisiting our recommendation on sectors given the sharp moves in cyclical and defensives of late. Below are our sector view with a brief rationale and supporting charts. Healthcare: Overweigh (2-4%) Pro: uncorrelated to the cycle and historically outperformed due to earnings resilience during downturn.ContinueContinue reading “An Update on Equity Sector“
The Making of An Accident, Brace for Impact
It was four decades ago when Federal Reserve last tighten monetary policy in a comparable speed and size to what we are seeing today. This is not surprising as it was also the last time the U.S. saw headline CPI inflation above 8% (Chart 1). Although the Fed was successful in bringing down inflation andContinueContinue reading “The Making of An Accident, Brace for Impact”
Macro Roadmap: Turning Point and Equity Rotation
Since early this year, we have been adamant in our view that the U.S. economy will decelerate rapidly this year amid the combination of the rise in the dollar, yields, and oil price, which all amount to a growth tax for the economy. There is little doubt that the manufacturing PMI surveys will show aContinueContinue reading “Macro Roadmap: Turning Point and Equity Rotation”
Equity Bear Market and Today’s Macro: The Good, The Bad, and The Ugly
The U.S. and global stock market have officially entered the bear market in June following upside surprises on U.S. inflation that was followed by the Fed having to raise its interest rate by 75bps – contrary to Chairman Powell’s comment that such size of hike is not on the table weeks earlier. Monetary conditions haveContinueContinue reading “Equity Bear Market and Today’s Macro: The Good, The Bad, and The Ugly”
Positive on Russia, Neutral on Mexico
Download PDF: russia-and-mexico-2021q4-pcDownload Remains Overweight Russia Russia and other oil-exporting countries historically perform poorly during a global slowdown, but tighter discipline among OPEC+ and shale producers since last year has bolstered oil prices to above $80/bbl, which creates a positive spin for energy producers. We have been constructive on Russian and energy sector since lastContinueContinue reading “Positive on Russia, Neutral on Mexico”
World Earnings and Valuation, Silver, EM Inflation
Download PDF: monthly_202105-1Download monthly_202105Download Developed World: Earnings and Valuation Outlook Earnings for most sector has recovered to pre-pandemic level, with health care and IT sector posting strong earnings in Q1. Growth expectations for both sectors, and materials, are strong and valuation is not demanding for the later. We believe that we are entering a structuralContinueContinue reading “World Earnings and Valuation, Silver, EM Inflation”
EM Equity Earnings and Valuation Outlook
Download PDF: em_valuethesis_pcDownload EM Equity Earnings Outlook The broad EM benchmark has rallied hard in the past year and is now some 15% above the pre-pandemic level. After the fall in earnings for most EM countries – with EM benchmark’s earnings currently still 17% below January 2020 level – the market is now expecting sharpContinueContinue reading “EM Equity Earnings and Valuation Outlook”
EM Review: Chile, Brazil, Indonesia and Mexico
Download PDF: em_review_pcDownload Chile The cyclical bullish case for Chilean stocks is straightforward. Chilean earnings are set to improve dramatically from the higher copper prices, which will continue to enjoy structural boost from electrification of vehicle and green energy infrastructure demand, as discussed in a previous report. Chinese imports continue to pose strong number inContinueContinue reading “EM Review: Chile, Brazil, Indonesia and Mexico”
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