In today’s briefing:
- Israel-Iran War Coming?
- Introduction: Initiation of Coverage in the Materials Sector
- Positioning Watch – Reflation bets are back in
- Monday Macro: Thoughts on the Next 15 Months
- HEM: Rolling Precariously
- UK Politics: Plague On Both Your Houses
- The Evolving and Varying Demographic Imprint
Israel-Iran War Coming?
- Welcome to this week’s Great Game, where we cover current geopolitical events relevant to your portfolio!
- Situation: Israel attacked the Iranian embassy in Damascus, Syria, killing several high ranking Republican Guard officers, and the whole region is now anticipating the Iranian response.
- Meanwhile, Israel and Hamas are making little progress in their truce talks in Cairo while Israel has withdrawn from smaller areas in Southern Gaza amidst heavy diplomatic pressure from the US.
Introduction: Initiation of Coverage in the Materials Sector
- Investics Research will initiate coverage of the materials sector in April 2024, starting with iron ore and then gold, coal, and steel in subsequent months (in that order).
- The areas of coverage on asset classes will encompass the underlying commodity and the associated equities.
- Areas of differentiation would include in-depth coverage of all equities (small/mid and large cap) and actionable tactical ideas on the commodity.
Positioning Watch – Reflation bets are back in
- Hello everyone, and welcome back to our weekly positioning/sentiment overview.
- The mood in equity markets is still good, with major indices stabilizing at levels far above all time highs despite taking some time to swallow hawkish comments from Fed officials.
- Markets seemingly don’t care about the repricing of Fed rates until they hear it from Powell’s mouth or until they get a feeling of true pivot (on the pivot).
Monday Macro: Thoughts on the Next 15 Months
- I want to start this Monday’s Macro with a very top-down discussion before digging into helpful market data.
- Here’s the thought – we’re entering a potentially dangerous, extended 12-to-15-month period for big macro debates.
- What matters for markets globally is what happens in the US, and what matters in the US is what the US Federal Reserve is thinking.
HEM: Rolling Precariously
- Despite resilient data, there is market skepticism regarding the effectiveness of policy.
- Increasing unemployment rates could necessitate interest rate reductions.
- The Bank of England may delay cuts until February 2025 due to excess demand and inflation, while the Federal Reserve and European Central Bank may delay until September 2024.
UK Politics: Plague On Both Your Houses
- Recent opinion polls suggest a potential record defeat for the Conservative Party in the upcoming general election.
- There is a risk that the Labour Party and particularly the Conservatives may misinterpret the results.
- Both parties could potentially draw incorrect conclusions from the election outcome.
The Evolving and Varying Demographic Imprint
- The profile and composition of demographics, all else equal, are likely to be a persistent headwind for advanced economies
- The impact of demographics on the Japan economy has been eye-catching for the last two decades through 2020
- But the other advanced economies, all else equal, can potentially experience greater demographic headwinds than Japan through 2030
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