DM Equity Allocation Model For Q3 2019

We recently introduced our Developed Markets (DM) Equity Allocation model. Building on the success of our EM model, this new framework extends our analysis to cover 24 DM equity markets. Our analysis is meant to assist global equity investors in assessing relative sovereign risk and optimal asset allocation across countries within the DM universe. Continue reading “DM Equity Allocation Model For Q3 2019”

Dollar Firm as Markets Await Fresh Drivers

  • President Trump confirmed that he is exploring tax cuts; our base case scenario for no US recession remains
  • FOMC minutes will be released; despite all the uncertainty in the US, we remain dollar bulls
  • Markets shrugged to news that Italian Prime Minister Conte resigned; Canada reports July CPI
  • Japan reported weak July supermarket and department store sales; Korea reported weak trade data for the first 20 days of August
  • South Africa July CPI is expected to rise 4.3% y/y Continue reading “Dollar Firm as Markets Await Fresh Drivers”

UK Brexit Scenarios Narrowing

The odds of a hard Brexit are getting alarmingly high. Here, we set forth some possible scenarios as to what may unfold ahead of the October 31 deadline. The most likely outcomes are not good and so we see UK assets continuing to underperform. Continue reading “UK Brexit Scenarios Narrowing”

Dollar Extends Gains

  • The dollar continues to climb; during this quiet period, some Fed officials are still talking
  • Press reports suggest the Trump administration is mulling the notion of a payroll tax cut
  • UK Prime Minister Johnson will travel to Germany and France this week; he is floating a possible alternative to the Irish backstop
  • China introduced a major reform to its monetary policy framework; RBA minutes were released
  • EM FX continues to get crushed; TRY is underperforming after yesterday’s easing measures by the central bank Continue reading “Dollar Extends Gains”

Turkish Policymakers Flirting With Disaster

Turkey’s central bank just loosened policy by easing some reserve requirements. Coming ahead of the policy meeting September 12, the move suggests the bank will cut aggressively then. Confidence in policymaking remains low even as the economy is mired in recession, and so we expect Turkish assets to continue underperforming. Continue reading “Turkish Policymakers Flirting With Disaster”

Thoughts on the Fed Ahead of Its Jackson Hole Symposium

There has been a noticeable lack of verbal guidance from Fed officials since the July 31 FOMC meeting. That makes FOMC minutes Wednesday and the Jackson Hole Symposium starting Thursday even more important. That said, we do not think the Fed will paint itself into another corner given continued firmness in the US data. Continue reading “Thoughts on the Fed Ahead of Its Jackson Hole Symposium”

Dollar Firm in New Week With Same Old Drivers

  • The dollar continues to climb; overall, the US economy remains in solid shape
  • Finance Minister Scholz suggested Germany could come up with EUR50 bln of extra spending if an economic crisis hits
  • A leaked UK government report paints a dire picture for a hard Brexit
  • Thailand Q2 GDP grew 2.3% y/y; Chile reports Q2 GDP and current account
  • Argentina Economy Minister Dujovne resigned even as the nation hit with multiple downgrades Continue reading “Dollar Firm in New Week With Same Old Drivers”

Drivers for the Week Ahead

  • The dollar continues to climb
  • FOMC minutes will be released Wednesday; this week also sees the annual Fed symposium in Jackson Hole
  • US data this week is minor; the picture painted last week by the US data is a good one
  • Markit flash eurozone August PMI readings and ECB account of its July 25 meeting will be released Thursday
  • Key Asian trade data will be seen this week; Bank Indonesia meets Thursday and is expected to keep rates steady at 5.75% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM is likely to remain under pressure.  Despite some signs of a slight thaw in US-China relations, a trade deal remains far off and so global growth and trade are likely to see continued downside risks.  Continue reading “EM Preview for the Week Ahead”