Technology
Highlights Key Portfolio Updates Synchronized global economic growth is driving real yields higher and boosting equities (Chart 1). Meantime, core inflation remains muted which will ensure that Fed policy stays sufficiently accommodative (Chart 2).…
Highlights EM growth is set to falter due to budding weakness in Asia's trade, a decline in commodities prices, and the frailty of EM banking systems. U.S./DM bond yields are heading higher for now and China's money/credit growth is set to decelerate.…
Out of the gate, our financials versus tech sector pair trade has caught fire, returning 6.2% in the last 2 weeks. This reflects the tightening of the historically wide relative market capitalization differential (second and third panels), as we expected…
Over the past month, we have reduced the extent of our consumer staples overweight, downgrading soft drinks to underweight and hypermarkets to neutral. In contrast, in May we boosted the S&P financials index to overweight on the back of improving…
Highlights Portfolio Strategy Swap consumer staples into financials in our pair trade versus the tech sector. Relative profit fundamentals signal that this relative share price ratio will soon come alive. Global growth tailwinds argue for lifting the…
The signal from communications equipment stocks continues to worsen. Communications equipment pricing power is experiencing decade-high decline rates and the ratio of new orders to inventories has rolled over, both of which indicate the early stages of an…
Highlights Although it is tempting to argue that emerging markets are in a new era where past correlations no longer matter, our belief is that it is only a matter of time until fundamentals reassert themselves. Several measures of equity markets have…
Communications equipment stocks have diverged negatively from the broad tech sector and now trade broadly in line with telecom carrier stocks - a key end-market, with a slight lag. The latest signal from telecom services stocks is bearish, and we recommend…
Highlights Portfolio Strategy Downgrade communications equipment stocks to underweight. All three end-markets are weak and signal that profits will continue to surprise to the downside. Continue to avoid the electrical components & equipment index.…
Highlights The structural theme of overweighting technology stocks within the overall equity benchmark, and relative to other cyclical sectors such as commodities and machinery stocks, remains intact. However, in absolute terms, EM tech/semi share prices…