Equities
The market got excited by the 50 bps Fed cut and China stimulus. But these are a recognition that economies are slowing significantly. Stocks often rally after the first Fed cut, before falling sharply. Investors should stay defensive.
The Nifty Fifty bull market of the early seventies was a mania in which investors got carried away chasing after a subset of prized growth stocks. While we do not think the Magnificent Seven stocks are in a bubble, they do have some parallels with the growth stars of 50 years ago.
Preliminary estimates suggested that US durable goods orders stagnated in August after having surged 9.9% m/m in July, and beating expectations they would decline. Excluding the volatile transportation component, however, durable goods grew a robust 0.5%. …
Our expectation that a looming US recession will morph into a global recession remains intact. US monetary easing will only take effect with a lag and current deteriorating economic conditions are the product of past easing. Meanwhile, China’s…
US financial conditions have become noticeably easier since August. The Fed has embarked on its easing cycle with a bang, sending equities higher and spreads lower, while the trade-weighted dollar gave back more than half of its year-to-date gains. The…
September’s Chinese PMIs were uninspiring. The Caixin manufacturing PMI dipped into contraction territory (50.4 to 49.3) despite expectations it would modestly improve. The alternative NBS manufacturing PMI improved from 49.1 to 49.8, above expectations,…
US nominal personal income growth decelerated to a 0.2% pace in August, from 0.3% in July, missing expectations that it would accelerate. Nominal personal spending also disappointed, growing at a slower 0.2% pace from 0.5%. In real terms, spending barely…
France’s and Spain’s preliminary September CPI readings declined on a month-on-month basis, clocking in at 1.5% and 1.7% y/y respectively, and undershooting consensus expectations. Germany’s and Italy’s updates are due on Monday and the Eurozone CPI will be…
Annual BEA data revisions resulted in a significant upward revision in GDP growth since Q2 2020, led by stronger consumption growth and more robust real disposable income growth than previously believed. Revisions also show that the savings rate has been…
We highlighted last week that while the Politburo policy announcements are unlikely to produce a meaningful business cycle recovery in China, they nevertheless administered a shot of adrenaline to investor sentiment. Chinese equities, China-plays and other…