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Economy

Declining Producer Prices Foreshadow Lower Eurozone CPI Inflation
Eurozone producer prices fell by more than anticipated in May. The -1.5% y/y decrease – which marked the first annual drop since December 2020 – was more pronounced than expectations of a -1.3% y/y decline and followed a downwardly revised 0.9% y/y increase…
Daily Insights
Not Much In The Minutes, Wait For Payrolls And CPI
The minutes from the June FOMC meeting didn’t reveal anything that wasn’t already known. They did explicitly say that “some” participants would have preferred a 25 basis point rate hike instead of a pause at the last meeting, but this was already evident from…
Daily Insights
On Resilient Services Versus Weak Manufacturing
In the past we have highlighted a dichotomy in the global economy characterized by weak manufacturing conditions versus a robust service sector. As goods spending normalized from the pandemic binge, consumption of services recovered following the removal of…
Daily Insights
Will The Equity Rally Be Sustained?
Seven of the 11 S&P 500 equity sectors are in the green on a year-to-date basis, led by those that benefitted from the AI frenzy: Information Technology, Communication Services, and Consumer Discretionary. In fact, the Industrials sector has recouped all…
Daily Insights
Overweight The Durable Goods Industry And Residential REITs
According to BCA Research’s US Equity Strategy service, residential REITs, homebuilders, and durable goods manufacturers are the beneficiaries of the negative supply shock in residential housing. Shortage of inventories of existing houses means that buying…
Daily Insights
China: Deflation Suppressing Industrial Profits

The recovery of China’s industrial profits is set to disappoint in 2H 2023. Corporate profits are more sensitive to changes in prices than volumes. Given producers’ selling prices will keep deflating through 2023, industrial profits will only stabilize at a very depressed level even with a mild improvement in volume. A disappointing recovery in industrial profits entails more downward risks for A-share prices in absolute terms. Chinese 10-year bond yields are set to drop to a record low.

China Investment Strategy by Qingyun Xu
World Economy Already In Recession

The world economy is likely already in recession, defined as world growth dipping to sub-2 percent. So far, the world recession has been China-led, but in the coming months it will change to being developed economy-led. Hence, while metals and industrial commodities may get some brief respite, high yield credit and stocks will underperform government bonds. New tactical recommendations are to overweight French luxury goods versus US tech, and to overweight USD/COP.

Counterpoint by Dhaval Joshi
Global Manufacturing PMI Deteriorates Further
The Global Manufacturing PMI’s 0.8-point decline to a six-month low of 48.8 in June indicates that manufacturing conditions deteriorated at the end of Q2. The forward-looking New Orders and New Export Orders components both fell deeper in contraction…
Daily Insights
ISM Signals Further Downward Pressure On Goods Inflation
The ISM PMI sent a pessimistic signal about US manufacturing conditions in June. The headline index dropped 0.9 points to a 3-year low of 46.0 – it eighth consecutive month below the 50 boom-bust line. This is consistent with the S&P Global PMI which fell…
Daily Insights
June In Review
The performance of financial markets continued to improve in June, with most of the major financial assets we track generating positive abnormal returns. The US equity rally – which had been narrowly concentrated among tech stocks for most of the year –…
Daily Insights

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