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Financial Markets

What To Do With Semis, Growth, And Energy

Outperformance of Growth sectors most likely has run its course. It is time to shift Growth vs. Value allocation to neutral, downgrade Semis, and upgrade Energy to overweight.

US Equity Strategy by Irene Tunkel
Unsustainable Divergences
According to BCA Research’s Emerging Markets Strategy service, the gap that has formed between the S&P 500 price and its operating profit margins, as well as the divergence between the S&P 500 Forward P/E ratio and the 30-year TIPS yield are…
Daily Insights
Mind The Gaps

Numerous divergences have opened up between global risk assets and global business cycle variables. These gaps are unsustainable, and odds are that the recoupling will occur to the downside with risk assets selling off.

Emerging Markets Strategy by Arthur Budaghyan
Return Scenarios For Holding US Treasurys Are Asymmetrical
The rise in bond yields over the past few weeks has made some investors wonder whether US Treasurys and other government bonds really are a good hedge against recession. Could there be an environment in which the economy goes into recession but bond yields…
Daily Insights
US Bank Stocks: The Bad News Is Priced In
On Monday, Moody’s downgraded the credit ratings of 10 small to mid-sized US banks and placed some of the biggest US banks on downgrade watch. The latter include Bank of New York Mellon, US Bancorp, State Street, and Truist Financial. The decision follows…
Daily Insights
The Death Of T.I.N.A.: Income Edition
During the last economic expansion, a structurally overweight allocation to stocks was at least partially warranted by the idea that “There Is No Alternative” – or “T.I.N.A.” During the last expansion, very accommodative monetary policy significantly reduced…
Daily Insights
China’s Engine Is Failing, And The World Economy Is Losing Altitude

China has generated 41 percent of the world’s economic growth through the past ten years, al-most double the 22 percent contribution from the US. Now that the Chinese growth engine is failing, we explain why it is arithmetically impossible for world growth to maintain the altitude of the past few decades. And we discuss an important investment implication.

Counterpoint by Dhaval Joshi
Has The RMB Depreciation Run Its Course?

Although the RMB has cheapened, macro conditions are not yet favorable for the Chinese currency. We expect the RMB to decline by at least another 5% in the next six months. A weak currency and subdued economic growth lead us to maintain a cautious stance on Chinese equities.

China Investment Strategy by Arthur Budaghyan
Is Good News Bad News?
Over the past two months, risk sentiment has improved amid receding fears of an imminent US recession. Economic data have been generating strong upside surprises and the US equity rally has broadened with cyclicals outperforming defensives since the beginning…
Daily Insights
US Policy Uncertainty Is About To Rebound
President Joe Biden’s approval rating trended down from a peak in February this year of 45.8% to the current level of 42.1%. Meanwhile his disapproval rating rose from a trough of 50.9% to its current 54.3%. The negative trend is worrisome for the Biden…
Daily Insights

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