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>The Federal Reserve raised interest rates by another 25 basis points, expecting inflation to come down 'not so quickly.'</li>
<li>Powell feeds the overly-enthusiastic market narrative by betting against history, anticipating that the current Fed tightening cycle will not significantly push up the US unemployment rate.</li>
<li>Powell and the Fed dodged accountability back in February, and the PacWest collapse hours after stating banking 'conditions have broadly improved' is very painful and disturbing.</li>
</ul>


The Federal Reserve raised interest rates by another 25 basis points, expecting inflation to come down 'not so quickly.'
Powell feeds the overly-enthusiastic market narrative by betting against history, anticipating that the current Fed tightening cycle will not significantly push up the US unemployment rate.
Powell and the Fed dodged accountability back in February, and the PacWest collapse hours after stating banking 'conditions have broadly improved' is very painful and disturbing.


Powell Press Conference: Persistent and Painful

<ul>
<li>Operating leverage works both ways. With the gap between earnings growth and sales growth now negative, stock markets have entered a phase of 'reverse operating leverage.'</li>
<li>To determine the impact of reverse operating leverage on future equity market returns, we looked at all instances when sales growth topped earnings growth since 2000.</li>
<li>As it turns out, a recession determines whether 'reverse operating leverage' hits equities or not. And since we expect a recession...</li>
</ul>


Operating leverage works both ways. With the gap between earnings growth and sales growth now negative, stock markets have entered a phase of 'reverse operating leverage.'
To determine the impact of reverse operating leverage on future equity market returns, we looked at all instances when sales growth topped earnings growth since 2000.
As it turns out, a recession determines whether 'reverse operating leverage' hits equities or not. And since we expect a recession...


Operating Leverage in Reverse: The Impact on Equity Markets

<ul>
<li>‘We lower the weight of equities. With markets pricing several Fed rate cuts, valuation rising, and earnings expectations too upbeat, catalysts for further increases are vanishing. </li>
<li>After the significant decline in March building permits, the implied recession odds linked to this indicator are rising again.</li>
<li>There's a classic example of reverse operating leverage going on: earnings growth is negative, while sales growth is positive. Most of the time, this is followed by a recession.</li>
</ul>


‘We lower the weight of equities. With markets pricing several Fed rate cuts, valuation rising, and earnings expectations too upbeat, catalysts for further increases are vanishing. 
After the significant decline in March building permits, the implied recession odds linked to this indicator are rising again.
There's a classic example of reverse operating leverage going on: earnings growth is negative, while sales growth is positive. Most of the time, this is followed by a recession.


Weekly Market Monitor (16) - The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


<ul>
<li>Latest weekly Global Liquidity data reveal a sharp hiccup caused by tax payments in the US and repo timing issues in China  </li>
<li>This does not foretell of any future serious disruption to our expectations for easier liquidity conditions later this year and next  </li>
<li>The jump in America’s TGA at the Fed signals weak tax revenues and warns that the debt-ceiling may be hit sooner, possibly by June/ July</li>
</ul>


Latest weekly Global Liquidity data reveal a sharp hiccup caused by tax payments in the US and repo timing issues in China  
This does not foretell of any future serious disruption to our expectations for easier liquidity conditions later this year and next  
The jump in America’s TGA at the Fed signals weak tax revenues and warns that the debt-ceiling may be hit sooner, possibly by June/ July


Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?

<ul>
<li>
 A major bull market in Global Liquidity has started. Be prepared the cycle is rising and looks set to expand towards a new top sometime around 2026.</li>
<li>A sharp uptick in the pace of liquidity injections into World financial markets occurred around October of last year in the wake of the British gilt crisis</li>
<li>
 China’s PBoC also began a major easing policy coinciding with the end of COVID-lockdowns. China matters hugely to the World economy because of her whopping size.</li>
</ul>



 A major bull market in Global Liquidity has started. Be prepared the cycle is rising and looks set to expand towards a new top sometime around 2026.
A sharp uptick in the pace of liquidity injections into World financial markets occurred around October of last year in the wake of the British gilt crisis

 China’s PBoC also began a major easing policy coinciding with the end of COVID-lockdowns. China matters hugely to the World economy because of her whopping size.


Major Global Liquidity Warning – Don’t Fight the Feds

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)

Powell Press Conference: Persistent and Painful

Powell is not thinking about rate cuts, contrary to what markets believe. Unfortunately, he also thinks banking conditions have 'broadly improved.'

Jeroen Blokland

Operating Leverage in Reverse: The Impact on Equity Markets

A recession determines the impact of 'reverse operating leverage' (earnings growth less than sales growth) on future equity market returns. And...

Jeroen Blokland

Weekly Market Monitor (16) - The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet

Welcome to the weekly Market Monitor, keeping you updated on the week’s most important charts and developments in financial markets.

Jeroen Blokland

Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?

Latest weekly Global Liquidity data reveal a sharp hiccup. It warns that that America's debt-ceiling may be hit sooner, possibly by June. It does...

Michael J. Howell

Major Global Liquidity Warning – Don’t Fight the Feds

A bull market in Global Liquidity already underway. Don’t fight the US Fed, the People’s Bank, the Bank of Japan, the ECB and even the Bank of...

Michael J. Howell