Cross-Asset Strategist & Quantitative Analyst, Pennock Idea Hub

Cam Hui

Cam Hui has been professionally involved in the financial markets since 1985 in a variety of roles, both as a quantitative equity portfolio manager and as a sell-side analyst. He graduated with a degree in Computer Science from the University of British Columbia in 1980 and obtained his CFA Charter in 1989.

Cross-Asset Strategist & Quantitative Analyst

Pennock Idea Hub

We are creators of independent equity research. The Pennock Idea Hub team are veterans of the investment industry. Much of our team has spent their careers at Merrill Lynch, Deutsche Bank, RBC Capital Markets and Wood Gundy. We have taken every aspect of research back to the studs and returned to first principles. The Pennock Idea Hub marries the interests of the sell and buy side. 

We offer the best research for institutional investors by:

-Only publishing research from veteran analysts
-Eliminate the inherent conflicts of the traditional sell and buy side relationship
-Ensure our team is always accessible; collaboration with clients nurtures our collective success

Cross-Asset & Quantitative Research

Thematic (Sector/Industry)

United states / Thematic (Sector/Industry)

Regular readers know that we have become increasingly cautious on the outlook for U.S. equities since August (see <a href="https://www.smartkarma.com/insights/10-or-more-technical-reasons-to-be-bearish" target="_blank">10 or More Technical Reasons to be Cautious on U.S. Equities</a> and <a href="https://www.smartkarma.com/insights/red-sky-in-the-morning" target="_blank">Red Sky in the Morning</a>). Now that the major U.S. averages have begun to show signs of technical breakdowns, it’s time to ask: “Is this just a correction, or the start of a bear market?”
Here is the case for a correction:
<ul>
<li>There are no immediate signs of a recession, which are bull market killers;</li>
<li>The bond-meggeddon may be nearly over; and</li>
<li>Institutional sentiment is too cautious for a prolonged bear market.</li>
</ul>
Here is the case for a bear market:
<ul>
<li>The Fed is still hawkish and may be on course to cool the economy into recession;</li>
<li>The U.S.-China trade war is becoming a new Cold War, which will lower the speed limit on global growth; and</li>
<li>Consensus earnings estimates are overly optimistic and prone to disappointment.</li>
</ul>
We resolve the correction and bear cases by defining a series of disparate real-time bear market tripwires, which have not been triggered yet. We will be monitoring these tripwires and keeping an open mind as to how they will resolve themselves.

Regular readers know that we have become increasingly cautious on the outlook for U.S. equities since August (see 10 or More Technical Reasons to be Cautious on U.S. Equities and Red Sky in the Morning). Now that the major U.S. averages have begun to show signs of technical breakdowns, it’s time to ask: “Is this just a correction, or the start of a bear market?”
Here is the case for a correction:

There are no immediate signs of a recession, which are bull market killers;
The bond-meggeddon may be nearly over; and
Institutional sentiment is too cautious for a prolonged bear market.

Here is the case for a bear market:

The Fed is still hawkish and may be on course to cool the economy into recession;
The U.S.-China trade war is becoming a new Cold War, which will lower the speed limit on global growth; and
Consensus earnings estimates are overly optimistic and prone to disappointment.

We resolve the correction and bear cases by defining a series of disparate real-time bear market tripwires, which have not been triggered yet. We will be monitoring these tripwires and keeping an open mind as to how they will resolve themselves.

A Correction, or the Start of a Bear Market?