Global Macro Strategy

Callum Henderson

Macroeconomics

* Concerns over China, the US and oil have driven this year's market slump, not the Fed* Yellen's Fed is likely to enact the most 'measured' tightening cycle in the history of the Federal Reserve* The offset to extremely measured Fed rate hikes will be the gradual end and reversal of the dollar rally* USD weakness on the back of growth competition will be a positive for high-beta assets, including EM* The focus within EM will be on alpha rather than beta and more specifically on relative value* Overweight ASEAN currencies vs. Underweight NEA currencies (ex-JPY) continues to generate alpha

* Concerns over China, the US and oil have driven this year's market slump, not the Fed* Yellen's Fed is likely to enact the most 'measured' tightening cycle in the history of the Federal Reserve* The offset to extremely measured Fed rate hikes will be the gradual end and reversal of the dollar rally* USD weakness on the back of growth competition will be a positive for high-beta assets, including EM* The focus within EM will be on alpha rather than beta and more specifically on relative value* Overweight ASEAN currencies vs. Underweight NEA currencies (ex-JPY) continues to generate alpha

Asia Calling: Measure for Measure - Why Fed Tightening Is Great News for High-Beta Assets

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Thematic (Sector/Industry)

Despite China's risks and macroeconomic issues, we believe even small rates of growth will yield significant opportunities for luxury firms.China's size, economic growth potential, and ultimate expansion of the high-end consumer market can substantially alter the outlook for many brands.With Chinese consumers already responsible for 30% of global luxury goods purchases, the continued growth of wealthy and upper-middle-class consumers appears to offer great potential, but also a high basis of comparison.We believe the market will experience solid growth, driven by the vast number of consumers entering the middle class. With this trend, we believe Chinese consumers will behave more like their Western counterparts, with more frequent lifestyle purchases of aspirational luxuries on a per household basis and fewer purchases of status symbol goods that were often a store of wealth.We see brands such as Ralph Lauren, Tiffany, Burberry, and Swatch as the most likely beneficiaries.Analyst: Paul Swinland

Despite China's risks and macroeconomic issues, we believe even small rates of growth will yield significant opportunities for luxury firms.China's size, economic growth potential, and ultimate expansion of the high-end consumer market can substantially alter the outlook for many brands.With Chinese consumers already responsible for 30% of global luxury goods purchases, the continued growth of wealthy and upper-middle-class consumers appears to offer great potential, but also a high basis of comparison.We believe the market will experience solid growth, driven by the vast number of consumers entering the middle class. With this trend, we believe Chinese consumers will behave more like their Western counterparts, with more frequent lifestyle purchases of aspirational luxuries on a per household basis and fewer purchases of status symbol goods that were often a store of wealth.We see brands such as Ralph Lauren, Tiffany, Burberry, and Swatch as the most likely beneficiaries.Analyst: Paul Swinland

China's Luxury Market Shifting From Status to Consumption As China's Middle Class Expands

United States

Dick's Sporting Goods, Inc. operates as a sporting goods retailer that manages stores primarily in the eastern and central United States. The Company owns stores that offers a broad selection of brand name sporting goods equipment, apparel, and footwear.

Burlington Stores, Inc. owns and operates clothing retail stores. The Company offers, through its stores and internet sites, men's, women's, and children's apparel. Burlington Holding operates within the United States and Puerto Rico.

Tractor Supply Company operates a retail farm store chain in the United States. The Company provides farm maintenance products, animal products, general maintenance products, lawn and garden products, light truck equipment, work clothing, and other products.  Customers include hobby, part-time, and full-time farmers and ranchers, as well as rural customers, contractors, and tradesman.

Abercrombie & Fitch Co.  a specialty retailer that operates stores and direct-to-consumer operations. Through these channels, the Company sells: casual sportswear apparel, including knit and woven shirts, graphic t-shirts, fleece, jeans and woven pants, shorts, sweaters, and outerwear; personal care products; and accessories for men, women and kids.

Murphy USA Inc. produces and distributes petroleum products. The Company engages in refining, marketing, and transportation of oil and gas products. Murphy USA provides products and services worldwide.

The Gap, Inc., is an international specialty retailer operating retail and outlet stores.  The Company sells casual apparel, accessories and personal care products for men, women, and children. The Gap operates stores in the United States, Canada, the United Kingdom, France, Ireland, and Japan.

Lithia Motors, Inc. retails, finances, and services new and used vehicles. The Company also provides other related services and products, such as the sale of parts and accessories, extended service contracts, aftermarket automotive products, and collision repair services. Lithia Motors operates throughout the United States.

Williams-Sonoma, Inc. retails cooking and serving equipment, home furnishings, and home accessories through retail stores, mail order catalogs and e-commerce. The Company offers its merchandise under the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, Pottery Barn Teen, and West Elm.

GameStop Corporation operates specialty electronic game and PC entertainment software stores throughout the United States, Australia, Canada and Europe. The Company stores sell new and used video game hardware, video game software and accessories, as well as PC entertainment software, and related accessories and other merchandise.

Penske Automotive Group, Inc. operates franchised automobile dealerships. The Company's franchises are located throughout the United States, Puerto Rico and the United Kingdom.  Penske Automotive sells new and used vehicles as well as offers maintenance and repair services on all brands it represents.

Chow Tai Fook Jewellery Group Limited retails jewelry.  The Company sells rings, necklaces, earrings, pendants, bracelets, and small statues.  Chow Tai Fook Jewellery operates retail stores in China, Hong Kong, Macau, Taiwan, Malaysia, and Singapore.

HIKARI TSUSHIN, INC. is a mobile telecommunication service subscription agency. The Company also operates telecommunication services stores, HIT SHOP, which sell cellular telephones, and related goods.  Hikari Tsushin also sells office automation equipment and insurance.

Hotai Motor Company Ltd. operates as an automobile dealership. The Company sells and services new and used cars and trucks in Taiwan.

Nitori Holdings Co., Ltd., is based in Hokkaido and operates a furniture retail chain.  The Company sells living room furniture, storage furniture, dining furniture, office furniture, beds, and interior goods.  Nitori Holdings also sells original brand merchandise and imported merchandise.

Zalando SE provides online sale of fashion accessories. The Company offers clothing, sports products, shoes, bags, and other accessories for men, women, and children. Zalando markets its products worldwide.

JD Sports Fashion PLC operates a chain of retail stores which sell brand-name sports and leisure wear. The Company sells sports and leisure footwear, clothing, and accessories, among other items. JD Sports Fashion serves customers in the United Kingdom.

Hennes & Mauritz AB (H&M) designs and retails fashions for women, men, teens, and children.  The Company sells a variety trendy, sporty, and classic garments in addition to accessories such as jewelery, bags, and scarves, and cosmetics. H&M owns and operates stores in many European countries and the United States.

JB Hi-Fi Limited is a music and electronic goods retailer in Australia.  The Company operates stores at sites located in most Australian States.  Products include consumer electronics, car sound systems, music and DVDs.

ABC-MART, INC. plans, develops, wholesales, and retails shoes.  The Company also plans and develops brand name shoes such as VANS and G.T. HAWKINS.  ABC-Mart imports and wholesales shoes, apparel, bags, and sundries as well.

L'Occitane International S.A. is a global, natural and organic ingredient based cosmetics and well-being products enterprise.  The Company designs, manufactures and markets a wide range of cosmetics and well-being products based on natural and organic ingredients sourced principally from or near Provence.

Ulta Beauty, Inc. operates a chain of beauty stores. The Company offers cosmetics, fragrance, skin, and hair care products, as well as salon services. Ulta Beauty serves customers throughout the United States.

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Ulta Beauty (ULTA US)

Asia Calling: Measure for Measure - Why Fed Tightening Is Great News for High-Beta Assets

* Concerns over China, the US and oil have driven this year's market slump, not the Fed* Yellen's Fed is likely to enact the most 'measured'...

Callum Henderson

China's Luxury Market Shifting From Status to Consumption As China's Middle Class Expands

Despite China's risks and macroeconomic issues, we believe even small rates of growth will yield significant opportunities for luxury firms.China's...

Morningstar, Inc.

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