In today’s briefing:
- QT Dead…Risk On Again?
- CX Daily: Huawei’s EV Partnership Yields Unexpected Hit
- Portfolio Watch: November Bear Market Rally?
- China Manufacturing Contracts for First Time in Three Months, Caixin PMI Shows
- The Weekly Market Monitor – Did Powell Kill the Bear?
QT Dead…Risk On Again?
- Three events have changed investors’ mood: US Quarterly Refunding (QRA), Fed FOMC Statement and H4.1 Release, and a downbeat October ISM Print
- Most important by far is the QFA. This effectively ‘added’ a net US$80 billion of liquidity to US markets. It confirm ‘fact’ that QT effectively dead
- Risk still remain in our view. These events underscore a flat market in risk assets. Equity bull market still requires positive Central Bank liquidity injections and a stable bond market
CX Daily: Huawei’s EV Partnership Yields Unexpected Hit
- Huawei / In Depth: Huawei’s EV partnership yields unexpected hit
- Li Keqiang /: Reflecting on Li Keqiang’s visits to Hong Kong: Savoring sweet soup, speaking English, and respecting the market
- Bonds /: Chinese local governments rush to launch infrastructure projects to tap into $137 billion of sovereign bonds
Portfolio Watch: November Bear Market Rally?
- Hello Everybody and welcome back for our weekly Portfolio Watch! As I am sure you are aware we have been awaiting the exact market move we have seen this week: The long end of the UST curve catching a breather fueling an inevitable risk-on rally.
- That fear is essentially why we have abstained from going full-on short beta these past weeks.
- A decision we are content with this week.
China Manufacturing Contracts for First Time in Three Months, Caixin PMI Shows
- Activity in China’s manufacturing sector contracted in October for the first time in three months, dragged down by weak external demand, a Caixin-sponsored survey showed Wednesday.
- The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the sector, fell to 49.5 in October from 50.6 the previous month.
- An index reading above 50 signals an expansion in activity, while a number below that indicates a contraction.
The Weekly Market Monitor – Did Powell Kill the Bear?
- Fed Chairman Powell unintentionally re-emerged as a central bank dove. Yet, the poor ISM Manufacturing Index reading paints an entirely different picture, signaling 17%(!) downside.
- Apart from the fact that US Small Caps cannot rely on Big Tech Companies to send prices higher, there is another compelling reason why they have been underperforming – debt.
- Earnings season: Negative price reactions meet mixed surprises. This is especially true in the US, where valuation looks demanding. Interestingly, price-earnings action in China may signal a bottom is in.
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