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 theContinue 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 yearContinue 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 bothContinue 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.Continue reading Ten Predictions for 2023

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 andContinue reading “The Making of An Accident, Brace for Impact”

Show Me the Data: Equity Outlook Through Growth and Liquidity Lenses

Sentiment and technical analysts are bullish. Fundamental and macro analysts are bearish. This captured the tone among the sell-side research I read in the past three weeks. The equity market 15%+ bounce from mid-June low has made several strategists turned bullish on risk assets, believing that we have seen the low of the cycle. TheContinue reading Show Me the Data: Equity Outlook Through Growth and Liquidity Lenses

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 aContinue 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 haveContinue reading “Equity Bear Market and Today’s Macro: The Good, The Bad, and The Ugly”

Can the Stock Market Handle Fed Tightening and Slowing Growth?

Download PDF: Three fundamental events have shaped the first quarter of 2022: Russian invasion of Ukraine, Federal Reserve’s hawkish monetary policy guidance and delivery of its first policy rate hike since the pandemic began, and greater reflationary efforts by Chinese authorities to stimulate growth. All these happened on the backdrop of a strong U.S. economy,Continue reading “Can the Stock Market Handle Fed Tightening and Slowing Growth?”

Strength of the U.S. Economy and Implications of Russia’s Ukraine Invasion

Download PDF: Three market moves have dominated the macro landscape in the past quarter amid the Fed tightening policy and geopolitical tension in Eastern Europe: rise in Treasury yields, strengthening dollar, and rally in oil prices. These all amount to a growth tax for consumers, which will inevitably lead to a growth slowdown in theContinue reading “Strength of the U.S. Economy and Implications of Russia’s Ukraine Invasion”