Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul>
<li>Global equities finished the holiday-shortened week lower.</li>
<li>The MSCI World Index declined 2.01%, while the S&amp;P 500 fell 1.42%.</li>
<li>This snapped a six-week winning streak for the S&amp;P 500, which is still up 13.25% YTD.</li>
</ul>


Global equities finished the holiday-shortened week lower.
The MSCI World Index declined 2.01%, while the S&amp;P 500 fell 1.42%.
This snapped a six-week winning streak for the S&amp;P 500, which is still up 13.25% YTD.


Industry Report - Cannabis News for the Week Ending June 23, 2023

Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Cross Asset Strategy

<ul>
<li>That Bank of England had to increase the pace of interest rate hikes so late in the tightening cycle is incontrovertible evidence that the central bank remains behind the curve. </li>
<li>Based on the historical relationship between consumer and producer prices, with a PPI of 1.0%, German headline inflation should be just below 2%</li>
<li>The NASDAQ Index and the US interest rates are diverging rapidly. This is not what is supposed to happen in a discounted cash flow model for growth stocks.</li>
</ul>


That Bank of England had to increase the pace of interest rate hikes so late in the tightening cycle is incontrovertible evidence that the central bank remains behind the curve. 
Based on the historical relationship between consumer and producer prices, with a PPI of 1.0%, German headline inflation should be just below 2%
The NASDAQ Index and the US interest rates are diverging rapidly. This is not what is supposed to happen in a discounted cash flow model for growth stocks.


The Weekly Market Monitor – Another Hawkish Twist

<ul>
<li>The valuation of Global and US Tech stocks is at extreme levels and are, by some metrics, more expansive than during the height of the Dot Com Bubble.</li>
<li>Earnings and sales growth are remarkably comparable to 1998 - April 2000, and investors are extrapolating these growth numbers too far.</li>
<li>On the other hand, the price performance of technology stocks does not resemble the rapid ascent witnessed during the Dot Com period at all. Yet, the downside risks are substantial.</li>
</ul>


The valuation of Global and US Tech stocks is at extreme levels and are, by some metrics, more expansive than during the height of the Dot Com Bubble.
Earnings and sales growth are remarkably comparable to 1998 - April 2000, and investors are extrapolating these growth numbers too far.
On the other hand, the price performance of technology stocks does not resemble the rapid ascent witnessed during the Dot Com period at all. Yet, the downside risks are substantial.


Is This a Valuation Bubble? Comparing the Dot-Com Boom to the AI Hype

<ul><li>A pause in interest rate hikes drove global equities higher.</li><li>Last week, the MSCI World Index gained 2.64%, while the S&amp;P 500 increased 2.22%.</li><li>The S&amp;P 500 earned its fifth consecutive positive week and is now 24.68% off its October 12, 2022, low.</li></ul>

A pause in interest rate hikes drove global equities higher.Last week, the MSCI World Index gained 2.64%, while the S&amp;P 500 increased 2.22%.The S&amp;P 500 earned its fifth consecutive positive week and is now 24.68% off its October 12, 2022, low.

The Highlights : Cannabis News for the Week Ending May June 16, 2023

<ul>
<li>Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.</li>
<li>We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.</li>
<li>In addition, we close our inflation-linked bond and Yen trade.</li>
</ul>


Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.
We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.
In addition, we close our inflation-linked bond and Yen trade.


Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

United States

The MSCI World Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31, 1969. MXWO includes developed world markets, and does not include emerging markets. MXWD includes both emerging and developed markets.

MSCI World Index (MXWO INDEX)

Industry Report - Cannabis News for the Week Ending June 23, 2023

Global equities finished the holiday-shortened week lower. The MSCI World Index declined 2.01%, while the S&P 500 fell 1.42%.

Water Tower Research

The Weekly Market Monitor – Another Hawkish Twist

The Bank of England confirms central banks and more monetary tightening is coming. Will investors shy away from (very) expensive equities and look...

Jeroen Blokland

Is This a Valuation Bubble? Comparing the Dot-Com Boom to the AI Hype

Current market valuation is not as extreme as during the Dot Com Bubble. Yet, many metrics reveal that Technology stocks are once again very...

Jeroen Blokland

The Highlights : Cannabis News for the Week Ending May June 16, 2023

A pause in interest rate hikes drove global equities higher. Last week, the MSCI World Index gained 2.64%, while the S&P 500 increased 2.22%.

Water Tower Research

Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

Our Fear & Frenzy Sentiment Index hit Frenzy for the first time during this rally, telling us to lower the weight of equities.

Jeroen Blokland