The events that transpired so far this year have made investing a stomach-churning experience. As many investors have seen their portfolio allocation to U.S. stocks increase amid the massive outperformance in 2023 and 2024, rising volatility for the S&P 500 have also directly translated to higher portfolio volatility. The headline-driven market translated to a sharpContinueContinue reading “Back to… Normal?”
Tag Archives: valuation
U.S. Economy and Financial Market: Mean-reversion to Trend
For several years now strategists and geopolitical analysts have been talking about the changing global order. But events over the past one month have accelerated this discussion, with global investors selling U.S. equity, bonds, and the greenback. As of the time of writing (April 22, 2025), international equity – proxied by MSCI EAFE – hasContinueContinue reading “U.S. Economy and Financial Market: Mean-reversion to Trend”
Turning Point in U.S. Economy, Monetary Policy, and Equity Market
Over the past year U.S. economic growth has significantly outpaced the rest of the world as tight labour market condition and robust consumer spending supported real GDP growth above the 2% trend. This contrasts with growth conditions across European and Emerging Market countries, which have fallen to anemic levels, and in China where the country’sContinueContinue reading “Turning Point in U.S. Economy, Monetary Policy, and Equity Market”
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”
Assessing U.S. Consumers’ Health, Crisis in the East, and Repricing the Cost of Capital
The resurgence of the long end of the yield curve back to the high in October 2022 has puzzled many strategists and investors. Compared to last year when CPI inflation was at 8.3% y/y and the Fed was barely halfway through its monetary policy tightening cycle, CPI inflation today has fallen to 3.2% y/y (July)ContinueContinue reading “Assessing U.S. Consumers’ Health, Crisis in the East, and Repricing the Cost of Capital”
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?”
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“
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”
Equity Market Riot: Have We Seen the Bottom?
monthly_202206_pcDownload There is no doubt that the correction in risk assets has always been a great opportunity for long term investors to further accumulate equity exposure. Investors could boost their return by gearing towards equity every time stocks fell by over 20%. The question is, how far are we from the bottom in current marketContinueContinue reading “Equity Market Riot: Have We Seen the Bottom?”
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