In today’s briefing:
- The Market Leaders Hiding in Plain Sight
- How to Position for the Coming Growth Slowdown
- Sustainability Meets Innovation: ESG Derivatives Become Mainstream
- US Corporate Outlook: Credit and Labour Hoarding Profit Risks Lurk in the Background
The Market Leaders Hiding in Plain Sight
- The long-term structure of global markets is seeing a loss of leadership by U.S. equities and emerging new leadership in Europe.
- The short-run outlook will depend on the results of earnings season.
- Our base case calls for a choppy and range-bound market.Wait for the breakout, or breakdown.
How to Position for the Coming Growth Slowdown
- The IMF warned about a growing risk of recession in the advanced economies: “A hard landing — particularly for advanced economies — has become a much larger risk.”
- The risk of a substantial economic slowdown is rising based on our review of macro, fundamental, and real-time market factors.
- Investors should position themselves by holding a diversified portfolio of stocks and bonds to protect themselves from possible future asset price volatility.
Sustainability Meets Innovation: ESG Derivatives Become Mainstream
- ESG derivatives (SLDs) are emerging as a key financial instrument in sustainable finance, as they incentivize companies to improve their ESG practices and help investors achieve their sustainability goals.
- As the market is rapidly growing and evolving, market participants and regulators are facing challenges related to data standardization, transparency, and greenwashing.
- To ensure transparency and effective risk management, market participants must collaborate and adopt data standards and frameworks to support the successful growth and impact of SLDs.
US Corporate Outlook: Credit and Labour Hoarding Profit Risks Lurk in the Background
- US non-financial corporations’ debt exposure has risen since the global financial crisis. Tighter bank lending standards will raise borrowing costs, while a higher federal funds rate raises debt servicing costs.
- The 2023 Q1 US corporate earnings reporting season should confirm the arrival of a corporate profits recession, while another contraction is expected in Q2.
- Labour hoarding and falling profits make the current environment similar to the onset of the 2001 recession: corporations were eventually forced to reduce headcount to stabilise earnings and stock prices.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
