Sectors

China’s economic growth will stagnate, at best, rather than revive. Lower valuations of Chinese equities are justified, and share prices have more downside. The RMB will continue to depreciate versus the US dollar.

Europe’s weak patch is not about the ECB’s policy tightening, at least not yet. 2024 is another story, and the ECB’s policy will prompt a Eurozone’s recession around the summer.

The Hamas attack against Israel, timed almost 50 years to the day after a similar surprise attack on Yom Kippur of 1973, has evoked parallels with the 1970s. Parallels not only with Middle Eastern geopolitics then and now, but also with inflation, economics, and financial markets. In this report, we explain what went wrong in the 1970s and whether the mistakes will be repeated. Plus: the sharp sell-offs in some Latin American currencies are reaching a potential turning-point.

Q3-2023 is expected to mark the end of the earnings recession for the past three quarters, opening the door to positive earnings growth. Whether that would be sustainable or will sputter once the recession settles in as expected in 2024 remains to be seen. However, much of earnings growth is already priced in.