JL Warren Capital

JL Warren Capital LLC is a leading independent equity research firm focused on Chinese companies and listed multinationals in China. We employ a bottom-up research approach that takes great care to avoid the acquisition of material non-public information. Through investigative due diligence including channel surveys and interviews, our research helps clients to pinpoint the dislocations in the market.

Investment Advisors

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Investment Advisors, JL Warren Capital

Junheng Li

Thematic (Sector/Industry)

China Real estate / Thematic (Sector/Industry)

<p>The <a href="https://www.smartkarma.com/entities/22886" target="_blank" data-smartkarma-citation="entities:22886:1">S&amp;P 500 (SPX INDEX)</a> fell by 5.2% last week and now stands 8.8% below its record high of 2873 on January 26. A combination factors contributed to the sell-off.  Those include rising wage inflation (2.9% according to the latest job report last Friday), the concern of the Fed’s overshooting the rates thus starting a recession, Fed’s quantitative tightening (via selling bonds) versus quantitative easing in past years, and deteriorating credit quality of the U.S. bonds due to the ballooning budget definite exacerbated by the tax cuts.   </p><p>Meanwhile, China the second largest economy in the global, could tighten sooner than expected.  Authorities made it plenty clear that financial supply-side reforms and deleverage are the priorities for China’s economic agency this year. We anticipate more measures of credit tightening around the upcoming National People’s Congress and Chinese People's Political Consultative Conference (CPPCC) in March.  The timing synchronizes well with the on-going quantitative tightening in the US.  If China tightens sharply, our view is that there will be more downside to the global equity markets. </p>

The S&amp;P 500 (SPX INDEX) fell by 5.2% last week and now stands 8.8% below its record high of 2873 on January 26. A combination factors contributed to the sell-off.  Those include rising wage inflation (2.9% according to the latest job report last Friday), the concern of the Fed’s overshooting the rates thus starting a recession, Fed’s quantitative tightening (via selling bonds) versus quantitative easing in past years, and deteriorating credit quality of the U.S. bonds due to the ballooning budget definite exacerbated by the tax cuts.   Meanwhile, China the second largest economy in the global, could tighten sooner than expected.  Authorities made it plenty clear that financial supply-side reforms and deleverage are the priorities for China’s economic agency this year. We anticipate more measures of credit tightening around the upcoming National People’s Congress and Chinese People's Political Consultative Conference (CPPCC) in March.  The timing synchronizes well with the on-going quantitative tightening in the US.  If China tightens sharply, our view is that there will be more downside to the global equity markets. 

US' Quantitative Tightening; Chinese Regulators’ Push for Deleveraging