The equity markets of Developed Markets (DM) economies are going through a slow roll in the year so far as recessionary indicators continue to be prevalent while not enough are flashing red to call for a recession in the biggest DM of all: the United States. This colours how the markets can be expected to perform in the next six months. JPMorgan estimates that while core inflation is likely to cool, the inflation slide is likely to prove incomplete. An actual recession would go a long way in cooling high valuations and increasing affordability. There, in the absence of a recession, the bank forecasts that global core inflation will remain well above 3% through the end of 2024. Of all possible scenarios, the dominant one indicates a 36% probability of a synchronized recession sometime in 20

Tesla ( $Tesla Motors(TSLA)$) was and continues to be a high-conviction stock. Even at a time when retail investor interest in the U.S. has been at net lows, institutional investors and tactical players such as hedge funds, et al, have been quite active in recent weeks in the markets. However, while the markets have been rising, the bulk of the movement was centred on 7 stocks – predominantly Big Tech – along with a few names either in or adjacent to the ongoing “AI Bubble”. There is some evidence of a sector rotation being attempted, but conviction hasn’t been strong enough to indicate there being a consensus on market recovery. The reason being is that macro indicators do not indicate an easing of the affordability crisis among the American cons

Many asset managers assume a zero-sum game between Developed Market (DM) economies and Emerging Markets (EM) economies. However, this excludes macroeconomic data and empirical observations. Indian equities stand as possibly the greatest case in point and have been witnessing an upsurge in recent time on the back of a number of structural reforms. Macro Trends The International Monetary Fund (IMF) estimated that the Indian economy’s GDP in real terms will display a growth rate that would outstrip that of most Emerging and Developing Asian countries as well as that of all Advanced Asian countries over the course of this year and the next, at the least. The expectation is that India will grow by 5.9% in FY 2023–24 and by an average rate of 6.1% over the next five years. This growth story isn’

In the 38th week of the year (ending 23rd of September), the United Auto Workers (UAW) union discussed intensifying its strikes against the "Big Three" - Ford ($Ford(F)$), General Motors ($General Motors(GM)$) and Stellantis ($Stellantis NV(STLA)$) - by going beyond a single assembly plants for each carmaker to plants that produce more profitable vehicles such as Ford's F-150, GM's Chevy Silverado and Stellantis' (Dodge) Ram on Friday. The initial strike by UAW was unprecedented: the union had never initiated action against all three carmakers simultaneously before. As of Friday of the 38th week, 38 plants within the “Big Three’s” manufacturing ecosystem in the U.S. h

On the 12th of September, Apple Inc ( $Apple(AAPL)$ launched the iPhone 15 and its associated variants. While some media reports and die-hard Apple enthusiasts have been positive, it bears remembering that the smartphone market is a crowded space with significant global fragmentation and a myriad of varieties tailored for different budgets and utilization parameters. The contextualization of this device's release and what it could mean for the company's fortunes is in order. iPhone vs. Other Flagship Models Over the past few years, the company's iPhone family has seen two ascendant rivals: the Galaxy family by Samsung ($Samsung Electronics Co., Ltd.(SSNLF)$) and the Pixel family by Google (

As of last week, the entirety of the Eurozone is in the throes of an electricity crisis. Almost very significant country in the Continent is now operating at electricity prices north of EUR 600/MWh.For context, the previous decade's average electricity cost was in the EUR 20-30/MWh range, signifying a nearly 20X increase over a 10-year period. In the year-ahead timeframe, both Germany and France are particularly hard hit and showing very strong correlation - with France's electricity costs now exceeding Germany's. This is a particularly trenchant problem for a country’s economy: electricity is a necessary “input” for factories, offices and tech companies to continue operating. With even the year-ahead price trajectories spiking upwards, the prospect of increasing costs affecting compa

For its September update of its iconic Fund Manager Survey (which has been covered before), Bank of America ($Bank of America(BAC)$), 212 panellists managing $616 billion in Assets Under Management (AUM) participated and provided some fascinating (and prescient) insight. Since the last survey (held in August), the percentage of respondents expecting a weaker economy in the next 12 months has increased by 5%. “Stagflation” expectations, i.e. below-trend growth and above-trend inflation, are now at a record high.With regard to the Eurozone, the survey records a recession to be most likely as a result of the energy crisis (as predicted in previous articles)Now, over in the US, the Fed Rate hike is pinned as a major influence

Last week, it was confirmed that the US Consumer Price Index (CPI) rose 8.3% year-on-year. Given that July's CPI of 8.5% was a little less than the previous month's 9.1%, a continued downtrend would have been an indicator that US recession was showing signs of recovery. August's number - in slight excess of forecasted estimates - this indicator doesn't hold water. Since the announcement, the S&P 500 dropped 4.32% over the day. In Bank of America's Fund Manager Survey edition in July (which was discussed in an earlier article), it was estimated by the survey organizer that CPI month-on-month pivots has no means for reducing inflation rise

San Jose-headquartered Super Micro Computer, Inc ($SUPER MICRO COMPUTER INC(SMCI)$ ) - better known as "Supermicro" - had been in operation for a long time and was relatively unmarkable in that it was just one of a number of companies building servers and storage systems for computing hardware (among other server-related areas). The company doesn't manufacture chips, per se, but rather assembles the server around a chipmaker's products in the most efficient manner. The founder, Charles Liang, holds several patents in server technology and the company went on to become one of the largest producers of high-performance and high-efficiency servers. His wife was the treasurer until 2019 (she remains on the board of directors) and his brothers run

In 2019, Jack Ma, the "chief founder" of Alibaba Group Holding Limited (ticker: $Alibaba(BABA)$), Jack Ma, stepped down as chairman and gave way to co-founder Daniel Zhang Yong who rapidly went on to be enter the roster of Time Magazine's 100 most influential people in 2020. Alibaba's sprawling business empire was long considered to be driven by those in the chairman's seat. This, however, changed in April 2023 when the company announced that it will split into 6 units - each of which will managed by its own CEO and board of directors. These units will be free to pursue independent fundraising and a public listing. Taiwanese-Canadian lawyer and long-time Hong Kong resident Joseph Chung-Hsin Tsai – who left a $700,000-a-year job with Sweden's Walle

Over the course of the previous week, an enormous downturn was evident across the spectrum of tech stocks. The Top 25 Nasdaq-100 (“NDX” in index form and $Invesco QQQ Trust(QQQ)$ in ETF form) constituent stocks' momentum largely flashed red: The one bright spot was MercadoLibre (MELI) with a very strong showing while Apple ($Apple(AAPL)$), Broadcom (AVGO) and Adobe (ADBE) effectively treaded water.  Meanwhile, the small-cap Russell 2000 ( $iShares Russell 2000 ETF(IWM)$ in ETF form) was a mixed bag that - on balance - was a little less red: Used-car dealership Carvana (CVNA), a handful of medtech/biotech stocks - chiefly BridgeBio (BBIO) and Inozyne (INZY

$XPeng Inc.(XPEV)$ is at a bit of a crossroads today: the company's agreement with state-owned Haima Automobile, which manufactured its G3 SUV, ended as of the 31st of December 2021. In the meantime, XPeng's Zhaoqing facility rolled out its 100,000th P7 sedan in March this year. The P7 is frequently compared to the Tesla Model 3 (and for good reason, going by its specs):Most consumers don't use top-line specs; they're more interested in the median, which is nearly at par.Construction of XPeng's second factory in Guangzhou was announced in September 2020 with production expected to start by the end of this year. Meanwhile, its third factory in the now-familiar city of Wuhan is expected to go online sometime around 2023 - to bri

The failure of Silicon Valley Bank ($SVB Financial Group(SIVBQ)$ ) – as well as that of Signature Bank and many others seemingly on the brink of collapse – gets attributed to social media-driven fear in the minds of depositors and investors. In other words, some might argue that there is no cause for concern: the financial sector – while not perfect – is quite robust. In actuality, a vicious cycle of risky business activities interplaying with government action in recent times exacerbated and laid bare the shaky foundations of the financial services sector. An important key to understanding this is to examine how U.S. government debt issuances are consumed by the financial giants of the world. Why Treasuries Are Key For Banks’ Market Activity Ord

At first blush, carmakers Guangzhou Xiaopeng Automotive Technology Co Ltd - better known as "XPeng" ( $XPeng Inc.(XPEV)$) - and NIO Inc ($NIO Inc.(NIO.SI)$) don't come off as being particularly noteworthy in China's crowded automotive market. Neither company is currently profitable nor have any of their models featured in the Top 10 list by brand for any of the months in this year. Despite that, two very interesting developments occurred over the past two months: Towards the end of June, CYVN Holdings - a specialist wealth fund of the Abu Dhabi government - poured $1.09 billion into NIO to secure a 7% stake and a director's spot on the board.  Almost exactly a month later, Volkswagen (

The Global Fund Managers Survey (FMS) by Bank of America ($Bank of America(BAC)$) is an interesting barometer for the sentiments of some of the biggest institutional players in the market (and which has received frequent attention in the course of our commentary over the past year or so). In the latest survey, survey respondents indicate that their risk appetite remains depressed and not far from the extreme pessimism of 2022 and comparable to the levels of the 2009 Great Financial Crisis (GFC). A net 29% of survey respondents are “underweight” equities, down from 31% in March. Similarly, the growth expectations worsened to December 2022 levels with a net 63% expecting weaker global growth. 35% of the respondents opine that the Federal Reserve wil

Vietnamese conglomerate Vingroup Joint Stock Company (JSC) - led by Mr. Phạm Nhật Vượng - is having a veritable fortnight in the sun. Originally starting out in Kharkiv, Ukraine as dried foods company Technocom in 1993 (which produced Ukraine's popular "Mivina" brand of instant noodles), the company began operations in Vietnam in 2000. Today, the organization operates in areas as disparate as commercial real estate development, amusement parks, supermarkets, schools, hospitals and healthcare clinics, mobile wallets and even Big Data. The largest Vietnamese organization by market capitalization which isn't state-owned, it's a prominent ticker ("VIC") in the Ho Chi Minh City Stock Exchange (HOSE). A lot of the recent hype coming its way lately hasn't been from "Mivina" (which was sold to Nes

In the Year Till Date (YTD) as of the 11th of December, the S&P 500 has risen to around 20.5%. For all intents and purposes, the index will close the year at a net positive albeit nowhere close to the highs seen in July. Since the S&P 500 is widely considered to be the "U.S. market", there is an imputation in some quarters that inflation/affordability concerns – along with other issues – have been shrugged off by key participants. This isn't exactly true.  Historical Sector Analysis A historical analysis of the index – along with a consideration of the somewhat-interrelated evolution of aggregated investor favour and the American economic engine – yields some fascinating insights: In the year after the levee broke on the subprime mortgage  market (i.e. 2009), there was an

It should be clear by now that the U.S. is headed towards a recession in all but the "technical" sense, i.e. unemployment figures aren't nearly high enough to call the current period recessionary. However, data coming out of the banking sector have a couple of indicators. Global macroeconomic consultancy TS Lombard published that, as of January this year, small banks in the U.S. were critically low on deposits and had starkly low liquid reserves.  Small banks were heavily dependent on loans contributing to their balance sheet at a time when lending activity was heavily distressed. In the midst of the collapse of Silicon Valley Bank and Signature Bank, the entire financial sector was under a lot of pressure. Small banks saw a massive drop in weekly deposits through the course of M