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Recession-Hard/Soft Landing

Markets Are Failing The Rorschach Test

What’s going on? The market-weighted stock market is up. But the equally-weighted stock market is not up. Neither is credit. Neither are industrial metal prices. Neither is the oil price, despite two waves of OPEC output cuts. We explain the dichotomy. Plus: European basic resources stocks can rebound, but Netherlands is likely to reverse.

Counterpoint by Dhaval Joshi
Swedish Economic Warning Signs
The Swedish manufacturing PMI declined to 40.6 in May, the lowest level since June 2020. This deterioration in Sweden’s manufacturing activity not only reflects the domestic economy, but it also highlights weaknesses in the global industrial cycle. Sweden…
Daily Insights
US Unemployment Rate Rises, Nonfarm Payrolls Increase
On the surface, Friday’s nonfarm payrolls report delivered a strong positive surprise. Establishment survey results reveal that employment increased by 339 thousand in May – above both the upwardly revised 294 thousand gain in April as well as consensus…
Daily Insights
Will UK Equities Continue Underperforming?
In our May In Review Insight, we showed that last month, UK stocks posted the lowest z-score among all major global equity markets, underperforming their Eurozone peers. What explains this relative weakness? The chart above reveals that the performance of…
Daily Insights
Sector Composition Has Been A Tailwind For US Stocks
US stocks have outperformed their global peers on a year-to-date basis. The MSCI US index’s 7.5% gain since January 18 eclipses the ACW index’s 3.1% increase. This trend has recently become even more pronounced: while the US index is up 1.5% since the end of…
Daily Insights
The Equity Bear Market Is Not Over
BCA Research’s Global Asset Allocation service continues to recommend an overweight on government bonds, neutral on cash, and underweight on equities and credit. Market technicals do not suggest this is a robust broad-based equity rally. The US stock…
Daily Insights
Beige Book Monitor: Cooling US Economy
The Fed’s Beige Book is signaling that the US economy is losing steam following an improvement in momentum earlier this year. The release revealed that future growth expectations deteriorated. In particular, manufacturing activity was weak across most of the…
Daily Insights
US Treasurys: An Attractive Long-Duration Entry Point
Over the past month, market participants have shifted their expectations for the path of the Fed funds rate. At the start of May, expectations were for the Fed to cut rates below current levels to just above 4.5% by the end of the year. Participants now…
Daily Insights
Why Oil Is Headed To $55 (The Reprise)

Expectations for oil demand growth through 2023-24 are way too optimistic. Until these expectations fall to -0.5-1 percent, the oil price has further downside. Plus: collapsed complexity confirms that AI is in a mania, while basic materials stocks and ZAR/EUR are rebound candidates.

Counterpoint by Dhaval Joshi
Forget The Debt Ceiling And Focus On These Equity Tailwinds

Once the debt ceiling soap opera ends, investors will likely turn their attention to some of the tailwinds supporting stocks. These include stronger earnings growth, diminished bank stresses, better housing data, early signs of an upleg in the manufacturing cycle, the prospects of an AI-driven productivity boom, and the fact that labor slack has managed to increase without rising unemployment. Investors should resist turning bearish on stocks for now but look to become more defensive later this year.

Global Investment Strategy by Peter Berezin

Related Topics

Business Cycles Capex Consumer Corporate Economic Growth Government Inflation/Deflation Labor Market Manufacturing Productivity See more Topics