Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Cross Asset Strategy

There are so many measures of equity market valuation that sometimes it is difficult to know which to focus on. It becomes especially tricky when central banks engage in unorthodox policies and effectively dilute their currencies which sends various measures off the charts.One way to simplify this is to look at the asset [any asset] in terms of an ounce of Gold because that Gold is unchanging. Movements in the price of Gold are really movements in the fiat currency it is measured against – an ounce of gold is an ounce of gold.When doing so we see the S&amp;P 500 is back at the 2018 high - the ‘real’ high of late…

There are so many measures of equity market valuation that sometimes it is difficult to know which to focus on. It becomes especially tricky when central banks engage in unorthodox policies and effectively dilute their currencies which sends various measures off the charts.One way to simplify this is to look at the asset [any asset] in terms of an ounce of Gold because that Gold is unchanging. Movements in the price of Gold are really movements in the fiat currency it is measured against – an ounce of gold is an ounce of gold.When doing so we see the S&amp;P 500 is back at the 2018 high - the ‘real’ high of late…

Technical Analysis

Short term price action on both the <a href="https://www.smartkarma.com/entities/s-p-500" target="_blank" data-smartkarma-citation="entities:22886:1" rel="noopener">S&amp;P 500 (SPX INDEX)</a> and <a href="https://www.smartkarma.com/entities/dow-jones-industrial-average" target="_blank" data-smartkarma-citation="entities:22887:1" rel="noopener">Dow Jones Industrial Average (INDU INDEX)</a> warn of a pullback this week.The S&amp;P 500 has completed ‘triple negative divergence’ which says the uptrend has run out of steam. Overnight the Dow Jones Industrial Average posted a bearish daily reversal – the last time that happened it fell more than 900 pointsWhile that may be ‘unfriendly’ in the near term if it repeats, such a development would likely lead to buying opportunities. Price action and levels are highlighted below…

Short term price action on both the S&amp;P 500 (SPX INDEX) and Dow Jones Industrial Average (INDU INDEX) warn of a pullback this week.The S&amp;P 500 has completed ‘triple negative divergence’ which says the uptrend has run out of steam. Overnight the Dow Jones Industrial Average posted a bearish daily reversal – the last time that happened it fell more than 900 pointsWhile that may be ‘unfriendly’ in the near term if it repeats, such a development would likely lead to buying opportunities. Price action and levels are highlighted below…

US Equities: Another Quick Pullback Before Higher?

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

We continue to see a mixed market, and weak market dynamics lead us to be cautious. One of the primary issues is weak breadth; the large-cap indexes (S&amp;P 500 and Nasdaq) remain bullish despite being held up by a relatively small number of mega-cap growth stocks, a condition that can persist for weeks or months. Ultimately, as long as there continues to be an absence of breakdowns at the index and Sector level we remain constructive overall.

We continue to see a mixed market, and weak market dynamics lead us to be cautious. One of the primary issues is weak breadth; the large-cap indexes (S&amp;P 500 and Nasdaq) remain bullish despite being held up by a relatively small number of mega-cap growth stocks, a condition that can persist for weeks or months. Ultimately, as long as there continues to be an absence of breakdowns at the index and Sector level we remain constructive overall.

U.S. Equity Strategy: Cautious Overall; Favor Large-Caps & Growth; Key Supports Holding In The U.S.

The rally in bonds has met its targets and seems to have run its course. Now as we are at very low levels of yield again, it seems unlikely that there is much juice left in this recent trend. Instead of reversing though we believe there is a risk of continued low nominal and real yields which should provide opportunities elsewhere.

The rally in bonds has met its targets and seems to have run its course. Now as we are at very low levels of yield again, it seems unlikely that there is much juice left in this recent trend. Instead of reversing though we believe there is a risk of continued low nominal and real yields which should provide opportunities elsewhere.

US Bonds & Asset Markets: Time for Another Rotation

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

The US consumer price index (both headline and core) rose at an annualized pace of 10.8% MoM in June 2021. For 2Q (April-June) 2021, the core CPI increased at an annualized pace of 10%, while the headline CPI increased 9.2% (annualized) in 2Q 2021. We had predicted precisely this outcome on 12 June 2020 (13 months ago) in <a href="https://www.smartkarma.com/insights/labour-market-slack-remains-but-fomc-will-need-to-tighten-by-mid-2021" target="_blank" data-smartkarma-citation="insights:40185" rel="noopener">Labour Market Slack Remains but FOMC Will Need to Tighten by Mid-2021</a> because inflation would rise markedly. While the FOMC has insisted that inflation is transitory, it actually began a stealth tightening in May 2021, engineering a month-on-month decline in the monetary base that month. CPI inflation is currently being under-estimated, because the Housing component is properly updated only half-yearly after a complete national survey of rentals and owners' equivalent rents (OER, the implicit rent that would be paid by homeowners were they to rent rather than own their home). The Case-Shiller 20-city housing price index was up 14.9% YoY in April 2021 (the latest data, released at end-June 2021), and this is bound to enter the CPI and PCE price index in 2H 2021. (Housing is considered an investment, not consumption, so rents and OER are the consumption portion; housing prices are not directly relevant to CPI, the cost of using housing -- rents -- are). Having risen just 2.6% YoY in June 2021, Housing is likely to rise much more sharply in 2H 2021, pushing up headline and core CPI (and also PCE, but less because of its lower weight). The labour market retains some sectoral slack in the hospitality and tourism-related sectors, but appropriately skilled labour is increasingly in short supply elsewhere in the economy.  Despite a high base from June 2020 (5% YoY), average weekly earnings (wages) were up 3.6% YoY in June 2021. Wage inflation will likely exceed 4% YoY in 3Q 2021, contributing additionally to inflationary pressure. St. Louis Fed President James Bullard (a non-voting member of the FOMC this year) has already called for tapering to begin (as "substantial progress" has already been made on the Fed's inflation and unemployment goals). While Fed Chair Powell insisted in his House testimony this week that tapering remains "a ways off", he told the Senate on the following day, "...of course we're not comfortable with" the fact that the reopening of the economy had "driven inflation well above 2%". The 27-28 July FOMC meeting will likely see more intense discussion of tapering, and we think formal (not merely stealth) tapering will be begin no later than the September meeting. We remain cautious about equities, although the strong recovery makes cyclicals and consumer cyclicals attractive.

The US consumer price index (both headline and core) rose at an annualized pace of 10.8% MoM in June 2021. For 2Q (April-June) 2021, the core CPI increased at an annualized pace of 10%, while the headline CPI increased 9.2% (annualized) in 2Q 2021. We had predicted precisely this outcome on 12 June 2020 (13 months ago) in Labour Market Slack Remains but FOMC Will Need to Tighten by Mid-2021 because inflation would rise markedly. While the FOMC has insisted that inflation is transitory, it actually began a stealth tightening in May 2021, engineering a month-on-month decline in the monetary base that month. CPI inflation is currently being under-estimated, because the Housing component is properly updated only half-yearly after a complete national survey of rentals and owners' equivalent rents (OER, the implicit rent that would be paid by homeowners were they to rent rather than own their home). The Case-Shiller 20-city housing price index was up 14.9% YoY in April 2021 (the latest data, released at end-June 2021), and this is bound to enter the CPI and PCE price index in 2H 2021. (Housing is considered an investment, not consumption, so rents and OER are the consumption portion; housing prices are not directly relevant to CPI, the cost of using housing -- rents -- are). Having risen just 2.6% YoY in June 2021, Housing is likely to rise much more sharply in 2H 2021, pushing up headline and core CPI (and also PCE, but less because of its lower weight). The labour market retains some sectoral slack in the hospitality and tourism-related sectors, but appropriately skilled labour is increasingly in short supply elsewhere in the economy.  Despite a high base from June 2020 (5% YoY), average weekly earnings (wages) were up 3.6% YoY in June 2021. Wage inflation will likely exceed 4% YoY in 3Q 2021, contributing additionally to inflationary pressure. St. Louis Fed President James Bullard (a non-voting member of the FOMC this year) has already called for tapering to begin (as "substantial progress" has already been made on the Fed's inflation and unemployment goals). While Fed Chair Powell insisted in his House testimony this week that tapering remains "a ways off", he told the Senate on the following day, "...of course we're not comfortable with" the fact that the reopening of the economy had "driven inflation well above 2%". The 27-28 July FOMC meeting will likely see more intense discussion of tapering, and we think formal (not merely stealth) tapering will be begin no later than the September meeting. We remain cautious about equities, although the strong recovery makes cyclicals and consumer cyclicals attractive. 

US Wages Are Resurgent, Even if Markets Haven't Noticed; Keep Your Eye on Inflation

United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

Where Is the S&P 500?

A proper measure of the S&P 500 against Gold reveals we are back at the exact position as the last high almost 3 years ago.

Shyam Devani

US Equities: Another Quick Pullback Before Higher?

Price actions warns of a potentially quick pullback as the S&P 500 runs out of steam and the Dow posts a short term reversal

Shyam Devani

U.S. Equity Strategy: Cautious Overall; Favor Large-Caps & Growth; Key Supports Holding In The U.S.

The S&P 500 remains bullish, recently hitting our 4400-4406 target as large-caps remain attractive. As long as support at the 50-day MA and 4257...

Vermilion Research

US Bonds & Asset Markets: Time for Another Rotation

The fall in yields has met all targets both in terms of individual nominal yields and across the curves. There now seems little value in bonds but...

Shyam Devani

US Wages Are Resurgent, Even if Markets Haven't Noticed; Keep Your Eye on Inflation

Core CPI rose 10% annualized in 2Q2021; rentals will reflect surging house prices in 2H 2021. Wage inflation in June was 3.6%YoY on a high base....

Prasenjit K. Basu