CoreMacro
| Global
Global macro research on the forces driving the world economy, with calls across stocks, bonds, and currencies.
The equity bull market is getting long in the tooth. Bonds should perform well once economic growth begins to slow. The dollar will strengthen over the coming months before resuming its downtrend. While crude has likely found a near-term floor, we favor metals over energy in the long run.
Korea’s recent equity market tantrum is a warning signal for global risk assets. We are booking profits on the long Asian semiconductor stocks / short US hyperscalers trade and downgrading Korea from overweight to neutral in an EM equity portfolio.
AI is transformative, yet tech stocks may not produce positive returns. Market cycles have not disappeared. Greed and fear will still produce large share price fluctuations. Meanwhile, US inflation is the key near-term risk. Global non-tech capex aspirations also look overstated.
A surefire way to make money is to buy stocks in industries experiencing shortages. AI supply-chain bottlenecks will persist for the next few years but markets will price in relief before then.
Ebola remains one of the world's deadliest viral diseases, but it is far less transmissible than COVID-19 or influenza. The most likely outcome remains containment rather than a global pandemic.
On Friday, the MacroQuant equity z-score fell to -1.01, below the critical -1 threshold that often coincided with bear markets in the past. With that in mind, today, I am downgrading stocks to a slight underweight on both a 3-month and a 12-month horizon.
Rising volatility in Korean markets captures a late-cycle surge in which euphoria and drawdown risk are rising together. While KOSPI momentum remains intact, the bigger opportunity may be emerging in the increasingly mispriced KRW, which could rally meaningfully as portfolio flow headwinds fade.
