In today’s briefing:
- Trading the Failed Breadth Thrust
- Why A Financial Crisis Could Be The Bulls` Best Hope
- Korean Financial Authorities Announce Measures to Protect Minority Shareholders in Split-Offs
Trading the Failed Breadth Thrust
- Technical analysts recently became excited when the percentage of S&P 500 stocks surged from below 5% at to over 90% in mid-August, but markets took a risk-off tone since then.
- From a technical analysis perspective, the bullish implications of the breadth thrust are still alive.
- The key risk to this forecast is the Fed will continue to tighten into a recession and deliberately tank stock prices to fight inflation.
Why A Financial Crisis Could Be The Bulls` Best Hope
- Based on the message from Jackson Hole, monetary policy is hawkish as far as the eye can see. However, there are two non-linear and narrow paths forward for equity bulls.
- One is a financial crisis that forces central bankers to pivot to an easier policy to preserve financial stability.
- The other is central bankers have misjudged the inflation outlook and markets are right. If long Treasury yields fall convincingly, it could be the signal for a market-led dovish pivot.
Korean Financial Authorities Announce Measures to Protect Minority Shareholders in Split-Offs
- Starting 1 January 2023, the Korean financial authorities will grant stock purchase rights to better protect minority shareholders’ rights.
- The minority shareholders that oppose the physical split of companies will be given the right to sell their stocks at the stock price prior to the split off.
- This is a long, overdue change that many investors have been waiting for. Therefore, this change in regulation will be viewed favorably by many investors.
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