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...

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...

Making the Best of the US-China Trade War

With the US-China trade dispute escalating further, we have returned to our previous analysis on export similarity to gauge the potential winners from a prolonged trade war. China’s exports are predominantly low-to-medium tech, which indicates a potentially high...

Fear and Risks of China Selling its USTs Overblown

The spectre of China selling USTs has risen again as trade tensions between the US and China heighten. The basic assumption is that US rates will go sky-high and the USD would plummet. However, there are several reasons to think the net effect would not be so...

Trading a Bear Market

This post was taken from our January 8th weekly report. We would characterise US equity indices today as being in a bear market. The official definition is a 20% decline from the recent high, close to close, but what does this mean in practice for investors? (The...

A Brief Bout of Market Optimism

This post was taken from our December 4th weekly report. We wrote last week about the absence of bottoming signals for the S&P. From a price perspective, there was little to suggest a sustainable rally was on the cards, as few of the usual signs of selling...