CoreMacro

Special Report

We enter 2024 as we were across the last four months of 2023, tactically equal weight across the board until the S&P 500 rally is complete and we gain a better entry point for underweighting equities and overweighting fixed income.

The recent uptick in European economic data will not last beyond the next six months. How will European corporate credit perform in this context?

The recent increase in Korean exports will likely prove to be a mid-cycle rebound within a cyclical downtrend. Korea’s households and enterprises are among the most indebted globally, and their debt service ratio is among the highest in the world. Korea’s 10-year bond yields have peaked. We discuss opportunities in Korean stocks as well as in fixed income and currency markets.

A cyclical recovery in China’s economy is still not imminent. The PBoC has tightened interbank liquidity to stabilize the exchange rate since late August. This does not bode well for the real economy. The uptick in onshore bond yields and the RMB’s appreciation will be transient. Equity investors should stay cautious.

Special Report

The first stop of the EIS Special Series: PIGS Have Wings takes us to Portugal.

Special Report

Global smartphone demand will likely find a bottom in 2024Q1 and rebound modestly between 2024Q2 and Q4. Competition in the global smartphone market will intensify. Chinese phone makers will gain market share from Apple and Samsung. Continue overweighting Taiwanese stocks, including tech, within the global equity benchmark.

Our kinked Phillips curve framework predicted the immaculate disinflation of 2023. That same framework is now warning that the global economy is heading towards a recession in the second half of 2024.

Contrary to the prevalent belief in the global investment community, goods/merchandise inventories in the US and East Asia are rather elevated. Financial markets respond to final demand fluctuations, not inventory restocking. Global manufacturing/trade will continue contracting, even though the pace of contraction might moderate in the near run. We recommend that investors fade the current rally.

Poland’s inflation will stay elevated. And yet, its return to the European mainstream has improved its financial market outlook. Accordingly, we are recommending new trades on Polish equity, fixed income, and currency.

The Chilean economy is in a unique position worldwide: as it is the first to enter a recession, it will be the first to recover. Together with historically cheap valuations, this will lead to a sustained outperformance of Chilean stocks relative to their EM peers.