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)

It gives us little pleasure to say “We told you so”. But we told you so.We warned in early December that earnings were going to disappoint in 2019 (see <a href="https://www.smartkarma.com/insights/2019-preview-winter-is-coming" target="_blank">2019 Preview: Winter Is Coming</a>). Since then, tumbling earnings estimates have been one of the main reasons for the weakness in stock prices.The recent warning from Apple is just setting the table for further disappointment, and the upcoming Q4 earnings season will be revealing as to how far estimates have to fall. We expect more market sloppiness in Q1 and the first six months of 2019, until the uncertainties surrounding the upcoming growth deceleration and trade war are resolved.We expect market in H1 2019 to be sloppy as it resolves these uncertainties. Conventional technical analysis suggests that the stock market is undergoing a bottoming process. Long-term sentiment is showing signs of capitulation, and insiders are buying. If history is any guide, the market should make an initial bottom in January, following by a rally and several months of choppiness, followed by a re-test of the previous lows. The re-test, which is expected to occur within a 2–6-month time frame, would be the final bear market bottom.On the other hand, should a trade war erupt, or if an overly hawkish Fed pushes the economy into recession, all bets are off. The template might be the 2001–-2002 market, where the market made an initial low in the aftermath of the 9/11 attack, rallied and chopped around, only to decline into an ultimate double bottom a little over a year later.

It gives us little pleasure to say “We told you so”. But we told you so.We warned in early December that earnings were going to disappoint in 2019 (see 2019 Preview: Winter Is Coming). Since then, tumbling earnings estimates have been one of the main reasons for the weakness in stock prices.The recent warning from Apple is just setting the table for further disappointment, and the upcoming Q4 earnings season will be revealing as to how far estimates have to fall. We expect more market sloppiness in Q1 and the first six months of 2019, until the uncertainties surrounding the upcoming growth deceleration and trade war are resolved.We expect market in H1 2019 to be sloppy as it resolves these uncertainties. Conventional technical analysis suggests that the stock market is undergoing a bottoming process. Long-term sentiment is showing signs of capitulation, and insiders are buying. If history is any guide, the market should make an initial bottom in January, following by a rally and several months of choppiness, followed by a re-test of the previous lows. The re-test, which is expected to occur within a 2–6-month time frame, would be the final bear market bottom.On the other hand, should a trade war erupt, or if an overly hawkish Fed pushes the economy into recession, all bets are off. The template might be the 2001–-2002 market, where the market made an initial low in the aftermath of the 9/11 attack, rallied and chopped around, only to decline into an ultimate double bottom a little over a year later.

H1 2019 Roadmap: Volatility Ahead