Equities
Expectations for US inflation at 3.3 percent are inconsistent with expectations for the Fed to slash rates, so one of these expectations is likely wrong. We describe how to play this mispricing. Plus, a new position is to go overweight global consumer discretionary (RXI).
Chinese stock prices have significantly decoupled from the country’s business cycle, with the full impact of US tariffs yet to be realized. The valuation-driven equity gains without a cyclical economic recovery will be vulnerable to a reversal.
The US High Quality (USHQ) portfolio underperformed its benchmark through July, returning -1.5%, whilst its SPY benchmark returned 0.2%. On a trailing three-month basis, performance was notably weak vs. benchmark, with USHQ underperforming by approx. 750bps.
