CoreMacro

While Chinese stocks have low valuations and are oversold, their attractiveness is dampened by uncertainties in the magnitude of stimulus and the dismal outlook for corporate profits in the next six to nine months.

Real wages are set to rise in CE3 economies with implications for their asset markets and currencies. Of the three, Polish assets and the zloty are the most vulnerable.

Magnificent Seven leadership is neither a new nor an unnatural phenomenon. There is no shortage of reasons why equities might have already made a top, but investors should not be tricked into thinking that the rally was somehow specious.

The euro has weakened sharply since mid-July as US growth continues to outperform that of the Eurozone. Is a new bear market afoot for the common currency?

If we look at global growth as an aircraft, the plane is experiencing failing engines and will lose more altitude in the coming months. Yet, neither Chinese authorities, nor the Fed or the ECB will be quick to come to the rescue as global growth downshifts. These dynamics herald a stronger US dollar and lower EM risk asset prices.

Special Report

Carbon credits as an asset class are becoming increasingly investable. Given that the structural bull case for this asset class is compelling, strategic investors should long carbon credits. However tactical investors should book profits or consider merits of a short position, since prices are likely to correct over the next 12-24 months.

The broader rally that started in June is premised on a Goldilocks narrative that will prove to be a fairy tale. Either by stubborn inflation. Or, by higher unemployment that shows that the war on inflation is far from costless. Or, by both. We discuss the implications for stocks and bonds. And we reveal our new top long dollar cross.

Stocks should continue to rally in the near term, but investors should prepare to turn more defensive towards the end of the year in advance of a recession in 2024.

Special Report

Contrary to the widespread belief in the investment community, the global copper supply-demand balance is no longer in deficit. Red metal prices are set to decline by another 10-15% as the global copper market will shift to a larger surplus in the next six months.

The stock market’s pre-eminent growth sector is not US tech, it is French luxuries. No other sector can compare with French luxuries’ massive and sustained pricing power. The risk for French luxuries is not a China slowdown, the risk is that the structural increase in super-wealth comes to an end. If anything though, the coming disruption from generative AI will boost super-wealth. Ironically therefore, the best investment play on generative AI might be French luxuries.