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Rising inflation concerns are amplifying developed market rate hike expectations; in contrast APAC central banks have benefitted from more muted CPI. The rationale for this difference has important implications for investors.
During October, the yield on the RBA’s yield curve control (YCC) target reference bond spiraled upwards and closed at 0.775%, well beyond the central bank’s 0.10% target. This was an unexpected reversal for a bond which was historically very stable with minimal central bank interventions, since the RBA first introduced the YCC program in March 2020.
At its semi-annual monetary policy meeting, the Monetary Authority of Singapore surprised the market by raising slightly the slope of the S$NEER policy band, from zero percent previously.
The RBA announced its first tentative step towards tapering and eventual policy normalization.
In June 2021, the People’s Bank of China (PBoC) announced changes to commercial banks’ mechanism for setting the time deposit ceiling from a multiplier method to a basis points method.
On 9 July 2021, the PBoC announced a 50bps RRR cut that will reduce bank funding costs and unleash a substantial quantity of liquidity support. The size of the rate cut surprised the market and confirmed the authority’s dovish pivot.
At their latest semi-annual policy meeting, the MAS' comments was modestly upbeat and the central bank revised up their headline inflation target - both of which could have implications for SGD cash investments.
Hong Kong's 2021-22 budget was announced recently. Although there were a few specific implications for short-term interest rates, the budget and the government’s economic plans will have significant longer term implications for HKD cash investors.
Cash investing remains extremely challenging with institutional investors trapped between an extremely dovish Reserve Bank of Australia (RBA) and markets pricing in inflation and steepening yield curves.
The surprise withdrawal of liquidity by the People’s Bank of China in the last week of January triggered a spike in short-term interest rates. Aidan Shevlin, International Head of Liquidity Fund Management, shared his perspectives on China’s monetary policy.
China’s bond market has seen an unusual wave of defaults over the past month – triggering a jump in credit spreads and raising investor concerns. Find out the implications to cash investments and why independent credit research remains important.
The RBA cut base rates and announced the introduction a traditional quantitative easing program “to support job creation and the recovery of the Australian economy from the pandemic”. This was by far the most wide-ranging monetary policy actions by the RBA – with significant implications for the AUD interest rates and investors.
Escalating political and trade tensions, strong international demand for HKD and increasing connection with China, have weakened the Linked Exchange Rate System (LERS) – with significant implications for HKD cash investors.
The Covid-19 outbreak has accentuated the negative implications for international trade, as well as domestic productivity and tourism in Singapore.
The recent coronavirus (2019-nCoV) outbreak in China has increased investors’ trepidation and financial market uncertainty.
Some things just cannot be talked about. So in this year’s Thanksgiving piece, I wrote about something else.
In this Eye on the Market: early signs of goods bottlenecks easing; the more persistent issue of US labor shortages; the US, Taiwan, China, treaty changes and semiconductor capacity; and an update on the most over-indebted US states
The global supply chain mess will require increased vaccination and acquired immunity, semiconductor capacity expansion and the end of extraordinary housing/labor supports to resolve. A close look at some very anomalous charts on shipping, semiconductors, inventories, labor shortages, foreclosures and mortality.
Greetings students. We look forward to seeing you back on campus. Your Fall 2021 syllabus is attached. Syllabus update: Biology BI66 “The Origins of COVID” has been cancelled until further notice.
Topics: if people avoided SPACs instead of avoiding COVID vaccines, the US would be both wealthier and closer to herd immunity. An update on our SPAC analysis from last February, and a look at the strange mathematical paradox that ends up understating some critical COVID vaccine efficacy data.
Red Med Redemption: A visual depiction of politics, ideology, vaccine resistance and the Delta variant. Other topics: US economic recovery update, and big tech reliance on acquisitions to fuel growth at a time of rising anti-trust enforcement. We conclude with a new “Investor Odds & Ends” section that covers NYC hotel/office markets and possible changes in personal, corporate and international tax rates.
COVID and the Delta variant; the Fed as firefighter and arsonist; US-China economic divorce picks up steam; and the pig-snake inflation timetable (how long until we know if there’s a permanent wage/price rise).
Every two years, we take a close look at the performance of the private equity industry given its rising share of institutional and individual portfolios. Our findings this year: the private equity industry is still outperforming public equity, but this outperformance narrowed as all markets benefit from non-stop monetary and fiscal stimulus, and as private equity acquisition multiples rise. We examine manager dispersion, benchmarks, co-investing, GP-led secondary funds, the torrid pace of industry fundraising and manager fees in this year’s piece.
An investor’s look at China’s recovery, the Sinopharm vaccine and the importance of scientific methods
Our February and March Eye on the Market pieces discussed shrinking US excess capacity, fiscal stimulus and the contortions people gyrate into to convince themselves that rising inflation would not be a problem for equity markets. My conclusion at the time: expectations for permanently low inflation and rates drove the rise in P/E multiples in recent years, so a reversal in inflation and rate expectations poses a risk to them. Since March, US equity markets hit a plateau as inflation expectations reached their highest levels in a decade. This Eye on the Market addresses questions we’re receiving on markets, inflation, rates and capital gains taxes, and concludes with comments on COVID and India.
Even as the world becomes more energy efficient each year, overall levels of CO2 emissions continue to rise. Without decarbonization shock treatment, humans will be wedded to fossil fuels for longer than they would like.
Topics: Biden goes for broke on growth, driving coincident and leading indicators to all-time highs; the Value recovery and where it goes from here; COVID herd immunity, the path to normalcy and rising concerns about thrombosis risks from vector vaccines.
The Smalligarchy: how the narrowest political margins in decades could deliver one of the biggest taxation and spending increases in the post-war era; a discussion of the investment implications of physical and human infrastructure bills; the US economy approaches lift off; and the latest news on Morone saxatilis.
If long-term US interest rates stay below 2%, that’s a great sign for equity investors. But if they don’t…it’s amazing to see the pretzels that people contort into to convince themselves that rising rates are not a problem for equities. Also: an early look at the Zoom shock on commercial and residential real estate, and the diverging COVID trends in the US vs Europe.
Short stories on the global recovery, plummeting COVID infections, Larry Summers & the bond market, SPAC sponsors, renewable energy, the Texas power outage and the battle for the Republican Party.
The SPAC capital raising boom, and why Biden’s early stage energy policies are more likely to increase oil imports rather than reduce emissions.
Equity markets are flying. So is COVID. So are corporate reactions to Congressional objectors.
Michael Cembalest’s views on what will drive markets and the economy in 2021, as well as the challenges we face that stimulus and vaccines can’t solve.
The Jan 6 Joint Session of Congress is shaping up to be a very contentious meeting. Here’s a brief 2-page primer on the rules of engagement, for those interested.
The belief in election illegitimacy is spreading faster than COVID. With field reporting from Alexander Fleming, Rutherford B Hayes, Richard III, Bob Newhart and the Attorney General of Ohio.
The election as referendum on America: how well does the “system” work, and for whom?
The cost of engineering a US recovery as the world waits for a vaccine; Biden agenda on taxes/spending; Tech stocks (2020 vs 1999); COVID and The Fountainhead; US election rules, dates and process in light of derogatory comments on mail-in voting by the President and Attorney General
The US recovery; The flood of money and market returns; Globalization lives; Reducing COVID mortality through vascular treatments; Realistic timetables for never-been-done before vaccines; Sweden’s COVID experiment is not what you think
Tracking the rebirth of the US consumer with real time data as a function of infection levels and state policy. Additional topics: no evidence yet of material second waves of COVID infection, and a round-up of the latest news on vaccine trials (Moderna, Oxford, Sinovac) and anticoagulants.
In this week’s Eye on the Market, we review topics from our recent client Zoom calls. Topics include: risk of inflation, second waves of infection, the effectiveness of lockdowns and Biden’s taxation and spending agenda.
An update on the COVID-19 crisis as the US prepares to reopen despite having one of the highest infection rates in the world. Additional topics: monoclonal antibodies and anti-viral trials; the growing gap between markets and the economy; S&P 500 earnings haves and have-nots; regional equity performance (Europe loses again) and leveraged loans at a time of rising bankruptcies.
In this week’s note, we discuss the latest news on US infection trends and reopening plans, Remdesivir trial results and whether US fiscal stimulus is “enough”.
Lockdown relaxation and economic reawakening…are we there yet?
In this week's note, we take a close look at country and regional virus data, and examine the pitfalls of over-extrapolating trends that often reverse.
After the equity rally, P/E multiples are back at around 16x 2021 consensus earnings.
Virus trends and head-fakes, convalescent plasma and U.S. vs. China lockdowns.
There are things the government can try and fix during a pandemic and other things which it can't.
There are some difficult days ahead as quarantines and lockdowns grow. I want to share something with you from John Stuart Mill as we head into the unknown.
Michael Cembalest, Chairman of Market and Investment Strategy, has compiled his extensive research on coronavirus.
A lot of data is being made available on the coronavirus, but most of it requires careful analysis before drawing conclusions.
Confounding almost every forecast we saw last week, Senator Biden appears to have emerged from Super Tuesday with a sizeable delegate lead. Why might the night have turned out so differently from what was expected just a few days ago?
A Coronavirus update: severity, consequences and implications for investors.
Answers to questions on the coronavirus, US megacap stocks, the cost of Democratic Healthcare plans, the Iowa caucus and the problem with the student loan system.
Consensus reactions to the Phase I US-China deal are very skeptical, but may be missing the broader point. A brief note on what happened, and the alternatives.
After a very positive year for investors in 2019, we expect lower positive returns on financial assets in 2020 as some Ghosts of Christmas Past reappear.
How a discussion about China and Hong Kong morphed into a chart war about Trump, Hoover, Taft, Rachel Maddow and Anderson Cooper.
While recessions and bear markets are a fact of life, something peculiar happened after the Global Financial Crisis: the rise of the Armageddonists.
A close look at the Progressive Agenda, China’s deteriorating welcome mat in DC and US Tech IPOs.
Michael Cembalest analyzes the performance of over 6,700 domestic and international active equity managers and discusses the challenges they face.
A brief comment on a proposal from leading Presidential candidates to ban hydraulic fracturing everywhere, immediately.
It was a long, hot summer at the Heritage Foundation. An update from the front lines of the Trade War.
Michael went on a search for Democratic Socialism in the real world, and ended up halfway around the globe from where he began.
Michael discusses how he should have taken Trump at his word on tariffs, and the impact of the widening trade war on global growth and equity markets as proposed tariffs approach pre-war levels.
The US-China trade war, prescription drug price legislation and the 2020 election.
Topics: unattainable objectives of the Green New Deal; overview of the world’s decarbonization challenges; Germany’s energy transition; Trump’s War on Science.
In the spirit of the 2022 World Cup football tournament in Qatar, we field our starting lineup, or “starting 11” on investing in 2022 and address them using charts from our Market Insights program and Guide to the Markets - Asia.
This paper, written by Tai Hui, discusses the potential impact of the Omicron variant and the investment implications for investors.
This paper, written by Chaoping Zhu and Kerry Craig, discusses the impact of the recent COVID-19 resurgence in China and other regions, and what it means for investors.
COP26 saw significant announcements in areas such as coal, methane and deforestation, yet progress fell short of the scale required to give us confidence that disruptive climate outcomes can be avoided. Physical climate risks warrant careful consideration for long-term investors.
This paper, written by Dr. David Kelly, discusses the October CPI report and what it means for investors.
Despite a slowdown in 3Q21 economic growth, corporate profits have been better than expected. Investors should use profits as a guide, as rising interest rates could pressure multiples and leave earnings as the main driver of returns.
This paper, written by Dr. David Kelly, discusses the October jobs report and what it means for investors.
This paper, written by Dr. David Kelly, addresses the FOMC's November meeting and their tapering plans.
This paper, written by Kerry Craig, Ian Hui and Gareth Lam, discusses whether or not the Federal Reserve and the Bank of England are hiking rates too slow or too fast, and what it means for investors.
This paper, written by Tai Hui, discusses the potential path of Fed monetary policy and the investment implications for investors.
Tai Hui, Chief Market Strategist Asia Pacific, and Zhu Chaoping, Global Market Strategist, discuss the potential investment implications of the newly released 3Q21 GDP data of China.
Stagflation has become a hotly debated topic among investors as inflation expectations rise and growth expectations fall. This paper, written by Kerry Craig, discusses our views on the topic and what it means to investors.
Discover why COP26 is important for investors. Explore the potential investment implications that could come with new climate objectives and commitments.
This paper, written by Tai Hui, discusses the market impact of the elections in the third and fourth largest economy in the world, and what this means for investors.
This paper, written by Dr. David Kelly, addresses the FOMC's September meeting announcement.
This paper, written by Tai Hui, discusses the major challenges faced by China equity and fixed income market, and their investment implications.
Germans head to the polls later this month to elect a new government. With the race to replace Angela Merkel as Chancellor still uncertain, Global Market Strategist Tilmann Galler sets out the policy agenda of the main parties, considers the most likely coalition scenarios, and looks at how the election may impact the outlook for the German economy and markets.
This paper, written by Tai Hui, discusses the possible triggers for a U.S. market correction, and what this means for investors.
This paper, written by Kerry Craig, discusses the recently released U.S. payroll statistics and potential impact on the possibility and path of the U.S. QE tapering policy rollout.
Top questions on Asian economic and financial market developments
This paper, written by Tai Hui, discusses the near-term possibility that Asian central banks could look to normalize their monetary policy, and what this means for investors.
This paper, written by Kerry Craig, looks into the key factors that we see leading to a sustainable move higher in government bond yields, and what this means for investors.
This paper, written by Tai Hui, compares the 2014 tapering with what is happening with U.S. monetary policy now, and what this means for investors.
While it may be tempting to chase recent performance, we continue to anticipate that the second half will see interest rates move higher, repricing more in-line with the above-trend pace of economic activity that currently characterizes our forecasts. This should be supportive of cyclical assets broadly, and allow value to outperform growth.
Governments are aligning behind the goal of achieving net zero emissions by 2050, but dramatic changes to the global economy will be required to get us there. Learn more about the policies and innovations that could pave the way to a carbon-neutral world.
This paper, written by Ian Hui, discusses the importance of income generation in the face of uncertainty and volatility.
This paper, written by Tai Hui, discusses the economic policy insights provided by the recent Politburo meeting, and what this means for investors.
The Federal Open Market Committee statement highlighted the continued improvement in economic conditions due to progress on vaccinations, but noted risks to the outlook still remain, largely reflecting the rise in cases over the past few weeks in unvaccinated communities.
This paper, written by Chaoping Zhu, discusses the Chinese new reforms and the subsequent selling pressure in Chinese equities, and what this means for investors.
This paper, written by Tai Hui, discusses how the outlook for energy prices will shape the inflation outlook going forward, and what this means for investors.
This paper, written by Chaoping Zhu, breaks down China's 2Q 2021 GDP data, and what this means for investors and Chinese policies going forward.
This paper, written by Kerry Craig, discusses the confluence of both fundamental and technical factors that has led to a decline in government bond yields despite a still-robust outlook for growth, and what this means for investors.
This paper, written by Tai Hui, discusses what the future path of the USD could look like given a more hawkish stance from the Federal Reserve, and what this means for investors.
This paper, written by Tai Hui, discusses what investors should make of the strong recent inflation data, and what it means for their investments.
This paper, written by Dr. David Kelly, addresses the FOMC's June meeting announcement.
This paper, written by Kerry Craig, discusses what investors should expect after the recent slew of robust economic data, and what it means for investors.
Could carbon prices be about to rise? Global market strategist Vincent Juvyns looks at the increasing regulatory pressures on carbon pricing, and assesses the potential impact on markets
This paper, written by Kerry Craig, Ian Hui and Gareth Lam, looks into whether commodities can still protect investors from inflation given the global transition to a low-carbon economy.
This paper, written by Chaoping Zhu and Marcella Chow, discusses the driving forces behind the recent Chinese yuan rally and what this means for investors.
This paper, written by Tai Hui, addresses the latest wave of COVID-19 outbreak in Asia and vaccination progress with its investment implications to Asian equities.
This paper, written by Ian Hui, highlights the outlook of 2021 U.S. earnings and its investment implications.
This paper, written by Tai Hui, discusses why Asian investors may want to look to European equities to provide return-generating potential and diversification benefits to their core equities allocation.
In this second paper out of four, we discuss the scale of the challenge ahead in the path towards a carbon-neutral world.
In this first paper out of four, we explore the paths that economies across the world are taking in the effort to achieve net-zero emissions, and introduce this series of four papers which will provide a framework to understand and address the challenges of getting to net zero and the associated investment implications.
This paper, written by Kerry Craig, addresses the recent announcement of U.S. tax increase proposal and its investment implications.
Recent economic and employment indicators have improved markedly in recent weeks. The Federal Open Market Committee (FOMC) appropriately acknowledged this recent strength, while continuing to reassure investors it would not act prematurely in pulling back monetary support.
This paper, written by Kerry Craig, discusses how investing in core real assets can help investors hedge the risk of inflation while still creating income.
This paper, written by Tai Hui and Chaoping Zhu, breaks down the 1Q 2021 Chinese GDP figures and discusses how this would impact China's fiscal and monetary policies, and subsequently, Chinese investments.
Over the last 12 months, the global pandemic has shaken our lives in many ways. While good health and social interactions are probably top of mind for most of us, the environment and climate are also among our key concerns.
This paper, written by Kerry Craig, discusses the inflation outlook in the U.S. and around the world in the coming months and years, and what this means for investors.
Rapidly rising incomes in vast populations are set to make Asia the largest contributor to global growth in the 2020s. For investors, the opportunity looks too big to ignore.
Inflation has been a hot topic amongst investors. Globally, inflation is expected to rise this year from 2020’s low levels. This reflation, a sign that the economy is operating above potential, should lead to strong earnings growth as well
For better or for worse, banks are required to meet various liquidity and leverage requirements. One ratio that measures a bank’s ability to absorb losses is the Supplementary Leverage Ratio (SLR). The SLR formula measures tier 1 capital, which consists mostly of common and preferred stock, as a percent of total leverage exposure.
This paper, written by Marcella Chow, discusses the drivers behind the recent Chinese equities market correction, and how investors should prepare for what comes next.
The rollout of COVID-19 vaccines and the passing of a further USD 1.8trillion fiscal package has brightened the economic outlook and today’s meeting gave investors a gauge on how this might adjust monetary policy in the years ahead.
This paper, written by Tai Hui, discusses the impacts of rising U.S. Treasury yields and stronger U.S. dollar on different emerging markets asset classes.
The pandemic would always have demanded a dramatic response in terms of easy monetary and fiscal policy. However, policy responses have been shaped not just by the needs of the present but by the lessons of the past.
Explore the strategies that can help investors maintain income and diversification in a post-Covid world of low interest rates and negative government bond yields.
This paper, written by Ian Hui and Gareth Lam, discusses the factors driving the recent jump in commodity prices, and whether they are entering a supercycle.
This paper, written by Chaoping Zhu, provides our forecast of what will be discussed and announced in China's National People's Congress on March 5, as well as its implications for investors investing in China.
This paper, written by Tai Hui, discusses the recent rise in government bond yields on the back of market expectations of economic recovery in the U.S., upcoming fiscal stimulus and the prospects of high inflation, as well as its implications for different asset classes.
This paper, written by Chaoping Zhu, discusses the potential path for China’s policy normalization after the country’s economy recovered from COVID-19.
The Solving for Income presentation uses selective slides from the Guide to the Markets – Asia to examine the role of income and how it will benefit investors by keeping it as a key investment objective.
Our principle six time-tested strategies for guiding investors and their portfolios through today's challenging markets to reach tomorrow's goals.
A fresh flock of doves
Joe Biden’s presidency is expected to bring increased momentum on tackling climate change. Carbon intensity is likely to become an increasingly important metric in investment decisions.
The challenge of low government bond yields means investors must rethink the 60:40 stock:bond allocation. Discover where they can turn for diversification.
This paper, written by David M. Lebovitz and Ian Hui, discusses our views on the U.S. 4Q20 earnings season so far and its investment implications.
It is hard to remember a time when Brexit was not dominating British headlines, but at the midnight hour, UK and EU negotiators finally reached agreement on a new trade deal. This piece addresses the key questions surrounding the deal: what is covered, how does it impact the outlook for the UK economy, and what are the market implications?
This paper, written by Tai Hui, addresses the reason behind and our view regarding the latest market volatility and its investment implications.
This paper, written by Tai Hui, discusses the implications of newly-elected President Biden's policies, such as those regarding COVID-19 and China.
This paper, written by Tai Hui, discusses the implications of rising Treasury yields on inflation, the U.S. dollar and overall economic recovery.
This paper, written by Tai Hui, discusses the key market risks heading into 2021.
This paper, written by Ian Hui and Alex Cheung, analyzes the recovery of various Asian economies from the COVID-19 pandemic and discusses the near-term and longer-term regional outlook.
This paper, written by Tai Hui, discusses the outlook on central bank policies to address inflation concerns heading into 2021.
This paper, written by Alex Cheung and Ian Hui, discusses the outlook on the Chinese fixed income market following FTSE Russell’s decision to include China in its World Government Bond Index.
This paper, written by Tai Hui, analyzes the S&P 500 earnings reports and forecasts and their implications on the recovery from the effects of COVID-19.
This paper, written by Tai Hui, examines the recent decline of the U.S. dollar and its implications on global markets.
A number of countries have seen a pick-up in new infections in recent weeks. Instead of derailing the global economy and forcing another dip in economic activities, the latest outbreaks are more likely to dampen and delay the global economy making a full recovery.
This paper, written by Marcella Chow and Chaoping Zhu, discusses the rebound in Chinese economic activity and its implications for investors.
The spread of the coronavirus and its impact on global economic activity has materially changed the investment outlook for 2020. In this piece we provide a framework for tracking infection rates globally and monitoring the impact on economic activity.
A consequence of the COVID-19 pandemic is that developed market central banks have pushed policy rates to zero, while engaging in asset purchases to keep bond yields low.
This paper, written by Kerry Craig, discusses the improving market sentiment and the outlook on equities.
This paper, written by Tai Hui, provides an update on fixed income investment opportunities.
This paper, written by Chaoping Zhu, provides a preview of China’s expected economic policies ahead of the National People’s Congress.
This paper, written by Tai Hui, provides an analysis of the potential long-term investment implications from COVID-19.
Investors are keenly monitoring the number of new infections around the world to gauge whether the COVID-19 outbreak is under control.
This paper, written by Chaoping Zhu, discussed the performance and outlook of Chinese economy, policies amid the global pandemic and implication for investors.
Spreads on emerging market (EM) bond yields have widened to levels not seen since the global financial crisis as concerns grow about the size of the economic downturn.
Oil prices collapsed in early March due to the price war between the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and Russia
As governments around the world step up their fiscal packages to counter the economic fallout from the COVID-19 outbreak, the Chinese government is also following the same path.
Initial claims for unemployment insurance surged to the highest level ever: 3,283,000, spiking from a slightly revised 282,000 last week.
This paper, written by Dr. David Kelly, reviews the U.S> relief bill and its investment implications.
The U.S. Federal Reserve (Fed) has pulled out its alphabet bazooka in an effort to ensure sufficient liquidity and the smooth functioning of financial markets, while also providing credit to businesses that are affected by the spread of COVID-19 and the stall in global economic activity.
In the past two weeks, the traditional negative correlation between equities and government bonds has broken down.
The U.S. Federal Reserve (Fed) opted for another surprise rate cut this morning (March 16, Asia time), instead of waiting for the March 17-18 Federal Open Market Committee meeting.
It is important to avoid trying to predict the future; rather, clients are best served by monitoring the present situation and maintaining composure.
Worries about the spread of the COVID-19 virus continued to grip markets this week.
This paper, written by Tai Hui and Kerry Craig, addresses the latest equity markets’ correction and its investment implications.
The good news is that the number of new confirmed COVID-19 cases in China is coming down and that more people are now recovering than getting infected.
The U.S. Federal Reserve (Fed) has become a dominant player in the bond market through successive rounds of quantitative easing (QE).February 19, 2020
The economic fallout from the Coronavirus outbreak is expected to become more significant for the rest of Asia in the weeks ahead.
China will also need to start addressing the economic fallout soon, as businesses face significant pressure from disruption to consumption.
This paper, written by Chaoping Zhu, discusses the outlook on China following its recent economic data releases and fresh outbreak of COVID-19 infections.
This paper, written by Marcella Chow and Chaoping Zhu, discusses the outlook on capital markets following a rise in Chinese bond defaults.
Policymakers on both sides of the Pacific have emphasized that they view their work as incomplete and that several issues remain un-addressed.
The U.S. and Chinese governments gave markets an early Christmas present when they agreed to a partial trade deal. However, much will depend on the details.
