Fed No Longer the “Only Game in Town” for Stocks

Aug 27, 2020 | US Economy

US equities are beginning to behave more normally. The average pairwise correlation across S&P 500 stocks has plunged (top-left chart), which tells us that stocks are starting to move independently from one another and are no longer driven to the same extent by...

Brazilian Equities: Pricing in the Bad News

May 7, 2020 | Emerging Markets

Brazil has so far avoided an aggressive national lockdown, but is nonetheless at the mercy of unprecedented demand destruction in developed markets and the collapse in global commodity prices. With the Bovespa losing 50% of its value in USD terms, the bad news, and...

ISM key for US economy, not Iran

Jan 15, 2020 | US Economy

Only a few weeks ago, top-of-mind risk for market participants was the trade war, according to BAML’s Global Fund Manager Survey. Now it is highly likely the list would be topped by tensions in the Middle East after the US assassination of the Iranian general, Qasem...

UK optimism has room to run

Jan 9, 2020 | UK

Weak sentiment and rising leading indicators combined with a supportive central bank is the best combination for asset markets. Sentiment towards the UK has been dismal, but with the ruling Conservative party’s much larger than expected victory at the General...

Momentum under fire as confidence softens

Oct 11, 2019 | US Economy, US Equities

With consumer confidence measures released a couple of weeks ago, we have observed an interesting divergence between the University of Michigan consumer sentiment index and Conference Board consumer confidence index (top-left chart). When we plot the spread and...

ECB piling easing pressure on BoJ

Oct 3, 2019 | Japan

Japanese equities have fallen out of favour with foreign investors over the past four years, since the initial euphoria of Abenomics faded (top-left chart). This has contributed to Japanese equities’ relatively low valuations, with the Topix becoming increasingly...

High Dividend Yield Strategies Require Care

Sep 6, 2019 | US Equities

Falling yields across the developed market world have posed greater hurdles for investors with yield and income targets. As the spread between bond yields and equity dividend-yields diverge, these investors move up the risk spectrum to meet their targets. As such, we...

Fed Easing sees Defensive Stocks come out on Top

Aug 22, 2019 | US Economy

Over the last five Fed easing cycles consumer staples, healthcare and energy provide the highest average total return above the index one year after the Fed’s first cut. This is not too surprising given that the Fed started cutting as recessions loomed in 2007 and...