In today’s briefing:
- Steno Signals #70 – 10 charts you NEED to monitor in global macro
- Stocks Want to Go to the Party, But Bonds Don’t Want to Get in the Car
- The Week That Was in ASEAN@Smartkarma – Solid BCA, Medikaloka Hermina, and The Keepers Season
- Ready to Get Spooked? Properly Comparing Real Yields and P/E Ratios = Massive Downside for Equities!
- Asia Economics: China’s Slowdown and Its Challenges and Opportunities for Asia
- Malaysia Economics: 2024 Budget Begins Long Journey of Fiscal Consolidation
Steno Signals #70 – 10 charts you NEED to monitor in global macro
- The world of Macro never fails at keeping us busy and this week I reveal the 10 charts that I currently monitor daily to keep myself up to speed on allocations amidst this turbulence. Enjoy (the ride)!
It’s been evident for a while that the diversification effects from US Treasuries are weak and we are now approaching a record high correlation between Equity and Bond returns. - If you haven’t already altered your portfolio composition, it is already overdue as the 60/40 portfolio seems structurally challenged.
Stocks Want to Go to the Party, But Bonds Don’t Want to Get in the Car
- Surging yields have not only cratered bond prices, but also created severe valuation headwinds for stock prices.
- A fundamental and technical review of the U.S. Treasury market shows that bond prices are poised for a rally.
- The fundamental and technical picture for U.S. equities is even brighter as fundamental momentum and oversold conditions point to a strong rebound.
The Week That Was in ASEAN@Smartkarma – Solid BCA, Medikaloka Hermina, and The Keepers Season
- The past week saw insights on Bank Central Asia (BBCA IJ), Medikaloka Hermina (HEAL IJ),Sariguna Primatirta (CLEO IJ), Philippine Stock Exchange (PSE PM), and Shakey’s Pizza (PIZZA PM).
- There were also insights on The Keepers Holdings (KEEPR PM), Geo Energy Resources (GERL SP), Thai Banks, the Indonesian economy, and Indonesian politics.
- The Week That Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights, macro and equity bottom-up, from across Southeast Asia.
Ready to Get Spooked? Properly Comparing Real Yields and P/E Ratios = Massive Downside for Equities!
- Comparing real yields and P/E ratios shows little relationship between the two. However, this is because this is the wrong comparison and includes the issue of regime shifts.
- Our analysis shows that equity market valuation is extremely vulnerable to spiking real yields.
- Based on history, the S&P 500 Index should become 25% cheaper as the colossal rise in real yield continues.
Asia Economics: China’s Slowdown and Its Challenges and Opportunities for Asia
- Beyond the cyclical difficulties, China is likely to see a secular slowdown in growth. There will be short-term pain for the rest of Asia due to the negative spillovers.
- Contracting import demand in China will hurt growth and currency stability in the rest of Asia. However, there are signs of resilience despite the trade slump.
- The medium-to-long run implications may be more benign if other Asian economies can benefit from the restructuring of supply chains and trade linkages.
Malaysia Economics: 2024 Budget Begins Long Journey of Fiscal Consolidation
- The first full-year budget of Malaysian premier Anwar Ibrahim sends a signal that the government is determined to return fiscal policy towards pre-pandemic norms.
- A rise in the sales and services tax, new taxes on capital gains and luxury goods, and a proposed global minimum tax suggest a determination to broaden the tax base.
- The heavy lifting in reducing expenditures comes from a reduction in the subsidy bill. Efforts to streamline electricity and diesel subsidies may just be the beginning.
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