Market Returns

Highlights Trade talks have been the primary driver of the rally in Chinese stocks and China-related assets over the past five months. While trade is important to China’s economy, Chinese domestic demand is the primary driver of China-related asset fundamentals, meaning that the recent equity…

Highlights Low Bond Volatility: Weakening non-U.S. growth and a more dovish Fed have crushed global government bond volatility, especially in Europe and Japan where yields are struggling to stay above 0%. Treasury-Bund and Treasury-JGB spreads, which now largely reflect long-run real growth…

Highlights Portfolio Strategy The ongoing capex upcycle, resurgent credit growth, easy Chinese policy trifecta, upbeat signals from high frequency financial market data and depressed technicals, all suggest that a re-rating phase looms in the S&P industrials sector. Leading indicators of…

Highlights Chart 1Look For Rate Hikes In H2 2019 Look For Rate Hikes In H2 2019…

Highlights Portfolio Strategy Chinese reflation, the ongoing global capex upcycle, and the Fed induced cap on the greenback with the knock-on effect of higher commodity prices, all signal that it still pays to overweight S&P cyclicals at the expense of S&P defensives.  Sustained…

The hiatus in the Fed’s rates-normalization policy in 1H19 in the wake of its capitulation to financial markets, supports our bullish view on gold prices, as it raises the risk of an inflation overshoot later this year. Per the Fed’s dual mandate, inflation and employment gauges are signaling the…

Highlights Portfolio Strategy We highlight our top seven reasons of why it pays to initiate a long materials/short utilities pair trade this week. Enticing long-term residential real estate prospects, a vibrant labor market, the recent improvement in house affordability, encouraging industry…

In a report published early last August, I wrote that: “The perfect time for equity investing is when markets are cheap, earnings expectations are overly pessimistic and the monetary environment is highly accommodative. Currently, the opposite conditions exist: valuations are stretched, earnings…

OPEC 2.0 is building physical optionality, to deal with different possible moves the U.S. can make on Iranian oil export sanctions and waivers. This comes despite an apparent break in the sense of urgency Saudi Arabia and Russia feel re production cuts. The coalition’s market monitoring committee…