Macro: An Energy and Geopolitical Recession? and more

• The market is somewhere in a transition period from an equity downtrend and realization of an economic growth slowdown.
• Investors need to keep in mind that the Fed cycle remains the dominant driving force in stock prices.
• Use rallies to reduce equity weights and overweight defensive sectors in their equity portfolios and slowly increase their weights in high-quality large-cap growth as duration plays.

• The U.S. stock market is poised for a counter-trend relief rally in the context of an intermediate-term downtrend.
• Investment-Oriented accounts should stay cautious and take advantage of any market strength to reduce equity weights.
• Traders can position for a possible rally, which is often brief but violent in bear markets.

• Upward revision to crude oil price forecast
• Higher oil-related revenue and fuel subsidy cost
• Small net positive fiscal impact

Expect USD100/bbl crude oil price average this year following the Russia-Ukraine war. Every USD10/bbl increase in crude oil price raises oil-related revenues by MYR7.5b and fuel subsidy cost by MYR6.1b, giving net positive fiscal impact of MYR1.4b or 0.4% of GDP. Budget 2022 assumed USD66-67/bbl. Our estimate is USD100/bbl results in MYR25.1b lift to Government revenue and MYR20.4b increase in fuel subsidy cost, thus net fiscal impact of MYR4.8b or 0.3% of GDP.