It is only one month to go before 2023 official ended and the U.S. economy is turned out to be much more resilient than we previously thought at the beginning of the year. Consumer spending continues to be significantly above pre-pandemic trend, even after adjusting for inflation, and both unemployment rate and jobless claims remainContinueContinue reading “Softer But Not Soft: 7 Top-of-mind Risks for 2024 and What to Do About It”
Tag Archives: investment
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”
Fundamentals vs Market Pricing
The combination of declining inflation and easing labor market condition has so far been interpreted by the market as signs that the U.S. economy will be able to stage a soft landing – a softening in growth without significant pick up in unemployment – before a new cycle begins. The equity market is disregarding theContinueContinue reading “Fundamentals vs Market Pricing”
Being Defensive: Early or Simply Wrong?
One valuable suggestion my former boss gave me when I started writing macro research note was to imagine myself standing one year in the future, looking back to the events that have transpired since and asking yourself if it should have been more obvious. The regional banking crisis back in March is one of thoseContinueContinue reading “Being Defensive: Early or Simply Wrong?”
Into the Wild: The Known Unknowns
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so” – Mark Twain I think the quote above sums up beautifully the blind spot we and other strategists may have amid the current late phase of the business cycle. After all, few, if any,ContinueContinue reading “Into the Wild: The Known Unknowns”
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”
Bracing for an Economic Winter
The week between Christmas and New Year last year was exceptionally cold, with snowstorms in both the Eastern and Western Coast of Canada and the U.S. Many flights were cancelled and those that managed to land at their destination, including the one that I was in, experienced heavy turbulence. The exceptionally cold winter this yearContinueContinue reading “Bracing for an Economic Winter”
End of Year Recap: 2022 in a Rearview Mirror
December has always been a good month to reflect on what happened over the past year and set goals for the next. Although this year has been painful for most investors, in hindsight it was only logical that the above-potential growth seen following the pandemic could not last forever and the frothy valuations of bothContinueContinue reading “End of Year Recap: 2022 in a Rearview Mirror”
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“
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“
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