May 12, 2017 | Emerging Markets
Liquidity conditions have deteriorated meaningfully for EM equities. The left chart below shows that the steep drop in G7 Excess Liquidity points to a risk of much lower EM equity prices in about 3-4 months’ time. This materially worse backdrop for EM equities is...
Mar 24, 2017 | US Equities
(from our Weekly of 21st February) As we have been noting, the market remains in a risk-on regime, with positive momentum, falling volatility and confirmation from various inter-market relationships such as cyclical stocks outperforming high dividend stocks, high...
Nov 18, 2015 | Uncategorized
The corporate profit cycle is now turning down, and our leading economic indicators point to further declines in return on equity (ROE) and profit margins. This is not a short-term call on equity markets but a major structural factor investors should bear in mind in...
Dec 12, 2014 | Featured, Japan
October saw the BoJ’s announcement of increased stimulus, coordinated with the new targets for the GPIF, 25% each for foreign and domestic equities (up from 12% each), and a decrease in JGBs, from 60% to 35% of holdings. Investors, both Japanese and foreign, have...
May 22, 2014 | US Economy
Profit margins in the US have hit modern-day record levels, and this has been used to help justify high equity valuations. Consensus estimates are for profit margins to remain steady, or even increase from current levels. We disagree for ironclad economic and...
Mar 24, 2014 | Featured, North America, US Economy
One of the points we have been emphasizing to clients in recent months is that US small caps are looking increasingly less attractive compared to large caps. Small caps have benefited from excess liquidity and a belief that as the US economy recovers, smaller...
Feb 14, 2014 | China, Emerging Markets, Featured, Global Economy
The debate on EM economies (and equities) is heating up. Initially this week, we had the financial world equivalent of the pillory with the widely reported closing of a high profile US hedge fund’s EM fund due to heavy losses in 2013. Solemn nodding followed by...
Dec 10, 2013 | Featured, Tactical, US Economy
We have showed the charts below to clients in the past few weeks. There are plenty of things to worry about (stretched market, tapering etc), but these charts are worth bearing in mind for those looking to bet heavily against the market in the next few weeks. Their...
