Outlook for October 2019

Fireworks in the high-growth sector is seeing investors turn towards value stocks after a long pause. The drawdown and divergence was something to behold during the month of September as the selloff provided some good opportunities in the growth space — although valuation in general still seems pretty high.

The US Fed continued its easing policy with another rate cut and September also saw liquidity issues in the overnight repo rate — resulting in the NY Fed stepping in. Most central banks around the world have started easing as the US$ continues getting stronger, so the currency wars are far from over.

Continue reading

Outlook for September 2019

August turned into a disaster for a lot of investors as the markets are roiling in trade war updates, resurgence in negative yielding debt, and other political issues. The flight to safety seems to be name of the game, as bond interest rates fall further and investors load up on gold.

The rate cuts are abound from central bankers around the world. The one central bank that is outlier, Bank of Canada, is also expected to turn dovish in coming days.

Continue reading

Outlook for August 2019

Summer doldrums are here, but no loss of excitement in the markets. The Fed has followed through in its most telegraphed move ever to cut interest rate. A cut of 25bps was almost a certainty as the Jul 31st decision date came close.

However, it seems like Chairman Powell may have shown his hand a bit more than expected. Trump has been calling for further cuts and announced more tariffs on Chinese goods. This increased the bond market’s pricing odds of another cut in Aug/Sep. While the stock market is cheering on, history has shown that rate cuts are seldom bullish for the economy and markets. It remains to be seen how things play out in the coming weeks/months.

Continue reading

Outlook for July 2019

Summer doldrums are here, but no loss of excitement in the markets. Every week we hear the same beat of the drums — trade negotiations, political circus, central bank policy commentary.

The treasury rates continue to weaken and bond market continues to price in rate cuts from the Fed and other central bankers. The amount of negative yielding debt is at a record and more securities continue to trade in negative territory. Whether this will result in an actual recession is anyone’s guess at this time.

The stock markets have done extremely well so far in 2019. The drop in markets in Q4 2018 and the low starting point for the YTD performance numbers help in showing spectacular returns.

Continue reading

Outlook for June 2019

After a record climb between December and April, the market is cooling off again. May ended up being a bad month for a lot of sectors as the tariffs/trade war rhetoric picked up steam.

Not only is the US now targeting a trade war against China, but also Mexico — thats 2 out of 3 largest trading partners. Of course, investors are rushing to safe havens now, so treasuries & gold are doing well. Following graphic provides a quick overview of market sentiment at the end of May 2019.

Continue reading