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

Cross Asset Strategy

In our last publication (see <a href="https://humblestudentofthemarkets.com/wp-content/uploads/2020/03/20200316-Trade-alert.pdf" target="_blank" rel="noopener">2020 Bounce = 1987, or 1929</a>), we had been searching for a template for the current bear market. We had suggested in the past that the roots of this bear has thematic similarities to 2008 (see <a href="https://www.smartkarma.com/insights/a-lehman-crisis-of-a-different-sort" target="_blank" rel="noopener">A Lehman Crisis of A Different Sort</a>). Today, health authorities are urging the use of social distancing to mitigate COVID-19, while financial institutions practiced similar social distancing at the time of the Lehman Crisis, which ended up seizing the global financial system.As the growth of COVID-19 cases continues outside of China, one other template comes to mind — 9/11. However, there are limits to the 9/11 analogy. The post-9/11 sell-off occurred in the middle of a bear market and recession. The latest COVID-19 shock is the spark for a new recession. The market bounced as fear subsided, but didn’t bottom until about a year later with a double bottom in July and October 2002.We are reiterating our downside estimate for the S&amp;P 500 of 1600–2160 (see <a href="https://www.smartkarma.com/insights/our-recession-call-explained" target="_blank" rel="noopener">Our Recession Call Explained</a>), which is based on applying a P/E range of 10–13.3x to a forward 12-month EPS discounted by -10%.

In our last publication (see 2020 Bounce = 1987, or 1929), we had been searching for a template for the current bear market. We had suggested in the past that the roots of this bear has thematic similarities to 2008 (see A Lehman Crisis of A Different Sort). Today, health authorities are urging the use of social distancing to mitigate COVID-19, while financial institutions practiced similar social distancing at the time of the Lehman Crisis, which ended up seizing the global financial system.As the growth of COVID-19 cases continues outside of China, one other template comes to mind — 9/11. However, there are limits to the 9/11 analogy. The post-9/11 sell-off occurred in the middle of a bear market and recession. The latest COVID-19 shock is the spark for a new recession. The market bounced as fear subsided, but didn’t bottom until about a year later with a double bottom in July and October 2002.We are reiterating our downside estimate for the S&amp;P 500 of 1600–2160 (see Our Recession Call Explained), which is based on applying a P/E range of 10–13.3x to a forward 12-month EPS discounted by -10%.

The 9/11 Market Template