The Fed faces a dilemma. Cut rates early to avoid a recession, but at the risk of not slaying wage inflation. Or, not cut rates early to ensure that wage inflation is slayed, but at the risk of a downturn. Faced with such a dilemma,…
The market’s pricing of a soft landing means that geopolitical risks are becoming more, not less, relevant in 2024. US domestic divisions will invite challenges as foreign powers rightly fear that US policy will turn more hawkish…
The Santa Claus rally has been fueled by investors optimism about a soft landing which is the least likely macro outcome in 2024. A pullback in the market is imminent as the probability of "too hot" or "too cold" will get priced in.…
Following today’s US jobs data release, the Joshi rule real-time US recession indicator inched up to 0.18 and is now just a whisker from its recession event-horizon of 0.20.
China’s equity market stands out as a major underperformer vis-à-vis its global peers in 2023. The 13% drawdown in China’s investable stock price contrasts with the 20% rally in the MSCI ACW Index. It reflects…
The AI craze was the dominant force driving difference in equity sector returns in 2023. Broadly-defined technology sectors were the top three outperformers last year with IT, Communication Services, and Consumer Discretionary…
In this final note for the year, we take profits and close several long-term investment positions: Overweights in Insurance and Commercial Services, and underweights in Utilities, and Retail and Commercial REITs.
The statement from last week’s Central Economic Work Conference indicates that Chinese authorities are still not considering large-scale stimulus in 2024. Odds are that a full-fledged business cycle recovery in 2024 is unlikely.…
The Republican Party’s odds of winning the 2024 election will benefit, if anything, from state courts’ attempts to exclude President Trump from primary or general election ballots. Higher odds of a change of ruling party will…