Brazilian Equities: Pricing in the Bad News

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

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

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

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

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

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

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...

Time to Take Profits on UK Miners

UK miners have performed well over the last year, returning 13.4% against the FTSE-All Share’s meagre return of 1.5%. Accelerating iron ore prices this year has driven this outperformance and the top chart illustrates that this relationship holds over long periods. In...

Active management most effective in India

Our leading indicators for India continue to fly high, providing a useful lead for Indian equity performance so far this year. Following Modi’s convincing re-election we expect to see a continuation of structural reforms that enhance the productive capacity of India’s...