Financial Markets
In a recent report, our Emerging Markets Strategy team recommended an underweight stance for Indonesian equities in EM portfolios. The team is also bearish on the rupiah. An unprecedented trade surplus recently gave Indonesia a rare opportunity to…
Global non-TMT stocks are at risk of a relapse given worsening conditions in global manufacturing and still hawkish policies from the Fed and ECB. According to the preliminary release, manufacturing PMI new orders for advanced economies fell below 45,…
Has the yield curve lost its ability to “predict” recessions? The widely-followed 2-year/10-year US Treasury curve now sits at -100bps, but it has been inverted since April 2022. Investors have seemingly been on “recession watch” ever since, even though the…
Our US Equity Strategy service looks back at their performance for the first half of the year and assesses what they hit or missed so far and comments on the ongoing rally in the stock market. The team hit on the economic slowdown but missed on the…
The market does not grasp the implied depths of recessions that will be needed to prevent inflation expectations from un-anchoring. Among the major economies, the most vulnerable to a deep recession is the UK. We explain why, and some investment implications. Plus: the yen is a rebound candidate, while Japanese equities are a reversal candidate.
Canadian inflation slowed in May, slowing to 3.4% on a year-over-year basis from 4.4% in April. This matched market expectations, with the monthly increase of 0.4% (versus 0.7% in April), slightly lower than the 0.5% consensus forecast. The year-over-year…
In a recent report, our Emerging Markets Strategy team posited that the bear market in Malaysian stocks will be prolonged. Disinflationary forces have taken hold of the Malaysian economy: money supply has plunged, bond yields are falling, and the yield…
Our Emerging Markets Strategy’s Reflation Confirming Indicator has been gapping down, signaling a material rebound in the broad trade-weighted US dollar. The broad trade-weighted US dollar is a counter-cyclical currency, i.e., it sells off when global…
European aerospace and defense stocks are on the offense. Year-to-date, they are up 20% in absolute terms and 24% relative to their US counterparts, both in US dollar terms. The relative 12-month forward earnings suggest that this outperformance still has…
Momentum, high cash balances, FOMO, and expectations of soft landing drive the market higher. This rally may continue for a while, but macroeconomic headwinds are intensifying and will eventually derail the rally. It is too early to celebrate victory.