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

<ul>
<li>Core PCE increased 6.9%MoM (annualized) in Jan'23, and hence was up 4.71%YoY, moving further away from the FOMC's 2%YoY target (rather than edging towards it as had been expected). </li>
<li>M2 growth averaging 18.2%YoY in Mar'20-Feb'22 (vs a pre-Covid average of 6.8%YoY in the previous 60 years) is the cause. FedFunds must rise to 5.5% by May'23 to compensate.</li>
<li>Severely inverted yield curve indicates that a recession (from Q2CY23 onward) will also help generate slack, taming inflation. Any delay in recession's onset will entail even more rate hikes. </li>
</ul>


Core PCE increased 6.9%MoM (annualized) in Jan'23, and hence was up 4.71%YoY, moving further away from the FOMC's 2%YoY target (rather than edging towards it as had been expected). 
M2 growth averaging 18.2%YoY in Mar'20-Feb'22 (vs a pre-Covid average of 6.8%YoY in the previous 60 years) is the cause. FedFunds must rise to 5.5% by May'23 to compensate.
Severely inverted yield curve indicates that a recession (from Q2CY23 onward) will also help generate slack, taming inflation. Any delay in recession's onset will entail even more rate hikes. 


US: Inflation Shock Implies More Rate Hikes Needed Even as Recession Looms

Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

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Cross Asset Strategy

<ul>
<li>There still is an abundance of inflation out there. Eurozone 'Supercore' inflation has not peaked and is now at 6.0%, while US Core PCE stunned markets by accelerating.</li>
<li>The S&amp;P 500 Index <a href="https://www.smartkarma.com/entities/spdr-s-p-500-etf-trust" target="_blank" data-smartkarma-citation="entities:763:1" rel="noopener">SPDR S&amp;P 500 (SPY US)</a>  has closed within 1% of the 200-day moving average. Dropping below it, would trigger another sell signal.</li>
<li>The 2-year US Treasury Yield has made news high, but stock market valuation has not followed, providing additional downside for equities. <a href="https://www.smartkarma.com/insights/yields-up-add-another-10-downside-for-stocks" target="_blank" data-smartkarma-citation="insights:96301" rel="noopener">Yields Up? Add Another 10% Downside for Stocks!</a> </li>
</ul>


There still is an abundance of inflation out there. Eurozone 'Supercore' inflation has not peaked and is now at 6.0%, while US Core PCE stunned markets by accelerating.
The S&amp;P 500 Index SPDR S&amp;P 500 (SPY US)  has closed within 1% of the 200-day moving average. Dropping below it, would trigger another sell signal.
The 2-year US Treasury Yield has made news high, but stock market valuation has not followed, providing additional downside for equities. Yields Up? Add Another 10% Downside for Stocks! 


Weekly Market Monitor Week 8 - Sticky Inflation, Moving Average Anxiety, and the Bond Yield Issue

<ul>
<li>The last time the 2-year US Treasury yield was at the current level, the S&amp;P 500 Index (<a href="https://www.smartkarma.com/entities/spdr-s-p-500-etf-trust" target="_blank" data-smartkarma-citation="entities:763:1" rel="noopener">SPDR S&amp;P 500 (SPY US))</a>  was trading at just below 3,800.</li>
<li>But even then, the P/E ratio of US equities was too high relative to short-term interest rates.</li>
<li>The S&amp;P 500 Index P/E ratio would have to fall to 17.4 from the current 19.1 to realign with bond yields, proving nearly 10% downside. Stay short.</li>
</ul>


The last time the 2-year US Treasury yield was at the current level, the S&amp;P 500 Index (SPDR S&amp;P 500 (SPY US))  was trading at just below 3,800.
But even then, the P/E ratio of US equities was too high relative to short-term interest rates.
The S&amp;P 500 Index P/E ratio would have to fall to 17.4 from the current 19.1 to realign with bond yields, proving nearly 10% downside. Stay short.


Yields Up? Add Another 10% Downside for Stocks!

Senior Equity Derivatives Trader

Simon Harris

Event-Driven

<ul>
<li>January CPI is due on Tuesday 14th and the market is expecting the biggest rise since October</li>
<li>The SPX has rallied over 7% since December but the Yield Curve has been moving higher and the equity rhetoric is turning negative</li>
<li>We look at a short-term trading opportunity in the options market to play the print</li>
</ul>


January CPI is due on Tuesday 14th and the market is expecting the biggest rise since October
The SPX has rallied over 7% since December but the Yield Curve has been moving higher and the equity rhetoric is turning negative
We look at a short-term trading opportunity in the options market to play the print


EQD | SPX Index : CPI Data Is Set to Raise Inflation Fears Again.Use Daily Options to Play the Event

Founder, TPW Advisory

TPW Advisory

Founder

Independent Investment Advisory Boutique

TPW Advisory is an independent investment advisory boutique located in NYC offering asset allocation & portfolio strategy advice, white label research and global, multi asset ETF based model portfolio delivery services.

<ul><li>Trees don’t grow straight to the sky do they?</li><li>So why would one expect stocks to just keep soaring after one of the more aggressive 3 month moves in history, especially among non US DM or EAFE (All Star Charts notes EAFE doubled SPY performance since October).</li><li>The US has enjoyed the January trifecta as we wrote about last week which has a perfect track record of higher stocks a year out.</li></ul>

Trees don’t grow straight to the sky do they?So why would one expect stocks to just keep soaring after one of the more aggressive 3 month moves in history, especially among non US DM or EAFE (All Star Charts notes EAFE doubled SPY performance since October).The US has enjoyed the January trifecta as we wrote about last week which has a perfect track record of higher stocks a year out.

TPW Advisory Friday Musings: Two Steps Forward, One Step Back

United States

SPDR S&P 500 ETF Trust is an exchange-traded fund incorporated in the USA. The ETF tracks the S&P 500 Index. The Trust consists of a portfolio representing all 500 stocks in the S&P 500 Index. It holds predominantly large-cap U.S. stocks. This ETF is structured as a Unit Investment Trust and pays dividends on a quarterly basis. The holdings are weighted by market capitalization.

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SPDR S&P 500 (SPY US)

US: Inflation Shock Implies More Rate Hikes Needed Even as Recession Looms

M2 grew 18.2%YoY in Mar20-Feb22; its 1.3%YoY decline in Dec'22 didn't stop a 6.9%MoM annualized rise in core PCE in Jan23. Fed Funds rate needs to...

Prasenjit K. Basu

Weekly Market Monitor Week 8 - Sticky Inflation, Moving Average Anxiety, and the Bond Yield Issue

Every week, the True Insights Weekly Market Monitor keeps you updated on the biggest developments driving financial markets. Not just good stories...

Jeroen Blokland

Yields Up? Add Another 10% Downside for Stocks!

Bond yields are skyrocketing and will end the latest bear market rally in equities. The relationship between short-term yields and S&P 500 Index...

Jeroen Blokland

EQD | SPX Index : CPI Data Is Set to Raise Inflation Fears Again.Use Daily Options to Play the Event

US CPI data is out on Tues 14th. We look at the market expectations and the current positioning in Equities. We consider the potential for a move...

Simon Harris

TPW Advisory Friday Musings: Two Steps Forward, One Step Back

Trees don’t grow straight to the sky do they? So why would one expect stocks to just keep soaring after one of the more aggressive 3 month moves in...

TPW Advisory

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