Fed announced to increase 25 bps after March FOMC meetin. Before we talk about the comments of the intitutions, let's look at the basic facts.I. Basic facts1. The Fed raised rates by 25 basis points as expected by the market, and its Fed Fund rate expectation (dot plot) is a bit more hawkish compared with the December FOMC last year:the median benchmark rate expectation is 5.1% at the end of 2023, the same as the December FOMC;the median benchmark rate expectation is 4.3% at the end of 2024, higher than the December FOMC's 4.1%.Source: BloombergHowever, the market clearly does not agree with Fed's hawkish stance. Both Fed rate futures and the OIS are pricing in the Fed cutting rates to around 4% by the end of this y

At the June FOMC meeting, Fed unsurprisingly paused the rate hikes. However, Fed Chairman Powell stated during the subsequent press conference, “This pause does not imply that the benchmark interest rate has reached its peak.” The dot plot released at the same time indicated that FOMC members anticipate two additional rate hikes totaling 50 bps by the end of this year.Strangely, the market seemed unfazed by such hawkish remarks, and US stocks only experienced a slight decline on that day. Looking at the Fed Fund Futures traded in the market, the expected benchmark interest rate for December not only failed to surpass previous highs but also remained significantly lower than the median of 5.625% indicated in the Fed's dot plot.Source: BloombergSo, is the benchmark interest rate indicated by

With the end of the year approaching, major institutions begin to provide outlook for US stock market in 2024.According to some reports released so far, most institutions are slightly more optimistic this year compared with the widespread concerns last year.We have selected three outlook reports from David J. Kostin team of Goldman Sachs, Michael J Wilson team of Morgan Stanley and the Mark Haefele team of UBS.Let’s look at their forecasts for the US stock next year, as well as their analyses and judgment on important issues and directions.Forecasts for S&P 500; Chart made by Tiger_Insights1. Up or down? US stocks growth forecast for 2024It is difficult to accurately predict the rising/falling points of US stocks next year. It is common for institutions to be "prove

The saying "Sell in May and Go Away" is a well-known phrase in the US stock market, which implies that the performance of the US stock market from November to April, during the half-year period, tends to be better than the performance from May to October during the other half-year period. Some people attribute this calendar effect to the impact of the mid-April deadline for US individual income tax filing, while others believe it is because most fund managers tend to be more aggressive in investing at year-end and year-beginning, and prefer to take vacations during the middle of the year. So, is this saying really true? Let's look at the objective data.1. Is the "Sell in May" true in US stock market? The chart below shows historical data from nearly 40 years (1985-2022) of the three major

$SVB Financial Group(SIVB)$ went bankrupt, and the European and American banking sectors have been shaken, causing a significant shift in recent market narratives.As shown in the following chart, the expected peak of the Fed's interest rate hike has risen from 5.5% to nearly 5.7%, then dropped to around 4.8% as of the close on March 15, meaning that there is at most one more interest rate hike left in this cycle.The expected level of the US benchmark interest rate in January next year has also undergone the same ups and downs. As of the close on March 15, it has been priced by Fed rate futures traders to decrease by four times compared to the peak interest rate hike.Therefore, although Fed officials have not yet made a clear statem

Entering May, the most dazzling narrative in the global market belongs to $NVIDIA Corp(NVDA)$ , the leader in AI computing power, with its stellar financial report. The day after the financial report, its market cap exceeding one trillion.Influenced by NVIDIA's strong financial report, the soap opera of the U.S. debt ceiling negotiations and the increased probability of a rate hike in the June FOMC meeting, along with other negative market news, were all set aside. The tech stocks in the U.S. stock market experienced the "melt up" that we anticipated in our Market Review| Rate Hike Pause, Stagflation Continues, Cherish the Good Times Before Recession in early May. However, global as

For a long time, US Treasuries have been widely regarded as the world's safest "risk-free assets" because the United States, as the world's strongest country, has never defaulted on its debt.However, on January 19th of this year, the US government's debt had already reached the statutory limit of $31.38 trillion, which means that the US Treasury Department will not be able to continue issuing Treasury bonds until Congress passes relevant legislation to raise the debt ceiling.Without external assistance, the US Treasury Department has been forced to use its Treasury General Account and cut or suspend unnecessary expenses. In addition, the high Treasury yields have further increased the interest expenses for the US government. This combination of factors has made the US Treasury Department i

In Wednesday's FOMC meeting, Fed acknowledged for the first time in a statement released after the meeting that inflation had eased somewhat. In the press conference, Powell said he was not concerned about the short-term easing of financial conditions (e.g., bond rates down, mortgage rates down, and stocks soaring) that has occurred so far this year, and risk assets went on a binge. As of yesterday, $NASDAQ(.IXIC)$, a poor performer over the last year, has seen a significant catch-up rally.Source: ForexLiveIn fact, there is nothing new in this FOMC Fed's views on inflation and the future direction of monetary policy, as we have analyzed very much in US Re

During the FOMC meeting in early May, Fed Chairman Powell hinted at a "halt to interest rate hikes." Meanwhile, the interest rate market have already pricred in at least two 25 bps rate cuts by the end of this year. For reference, the current benchmark rate is 5%-5.25%. Therefore, barring any major surprises, the deep inversion of US Treasuries yield curve is already on the path to bottoming out and rebounding. So, during the process of transitioning from an inverted yield curve to a positive one, how will major asset classes around the world perform? What investment opportunities will arise? Let's look at how the data speak:Six instances of yield curve inversion over half a centuryAs the name suggests, yield curve inversion happens when a yield curve graph of (typically) government bonds

As of May 29th, President Joe Biden and House Speaker Kevin McCarthy have announced they have agreed in principle to raise the US debt ceiling and avert a default. For the market, reaching a debt ceiling agreement may mean the start of a new round of liquidity shocks, as it would allow for the issuance of new US Treasuries.According to the US Department of Treasury forecast, approximately $1.46 trillion US Treasuries are expected to be issued in Q2 and Q3 of this year, which will inevitably absorb a significant portion of market funds.Source: Tebon SecuritiesWhy new issued Treasuries may cause a liquidity crisis?Generally, when new Treasuries are issued, the balance of TGA on the liability side of Fed will be increased. Assuming the asset side remains unchanged, the issuance leads to the d

After a difficult year in 2022, the global market finally sees a glimmer of hope. As the Fed's policy faces a turning point, China has begun to focus on its economy, giving many institutions confidence that Chinese assets will rebound from last year's downturn. Our view is that "the global opportunity lies in China, the Chinese opportunity lies in consumption, and the consumption opportunity may lie in baijiu (distilled liquor)."1. Macro cycle: global opportunity lies in China1.1 Mismatch of Economic Cycles between Europe, America and China.In the post-pandemic era, anti-globalization is becoming increasingly prevalent. There is an obvious mismatch in the economic cycles of major economies around the world.Overall, Europe and the US have had similar rhythms. After the pandemic hit, QE resu

On April 12th, US CPI and the minutes of the March FOMC meeting were released. After the two key events, the pricing of Fed rate futures and the Wall Street investment banks led by Goldman Sachs' chief economist Jan Hatzius all generally expect that the Fed will raise interest rates for the last time at the May FOMC meeting.So what has been the performance of US, Hong Kong, and other major global asset classes before and after the last time the Fed raised interest rates in history?The following chart shows the 16 times the Fed has raised interest rates for the last time since 1971. In the year following these events, the US economy has gone into recession 8 times and not gone into recession 8 times. Therefore, we will first look at the historical performance analysis of these two situation

From January 9, with the bank stocks starting the Q4 2022 earnings season, the market begins to question that whether the wave of “earnings plunge” will beign or not. So, how do the institutions view this issue?Source: Credit SuisseI. Overview of Earnings ExpectationsGenerally speaking, Wall Street analysts tend to revise earnings estimates before the earnings season, so as to make the companies' earnings beat the expectation.According to Credit Suisse,the consensus estimate for 2022 Q4 $S&P 500(.SPX)$ EPS has been revised down by 7.8% since the end of September last year, which is lower than the averege downward revision of

There are still medium- and long-term opportunities in chip design, manufacturing, and production in the semiconductor industryApart from whether the U.S. stock index $S&P 500(.SPX)$ $NASDAQ(.IXIC)$ $DJIA(.DJI)$ will fall or continue to rise in the second half of the year, there are some medium- and long-term opportunities that investors should seize. For example, the semiconductor sector, which is benefiting from generative AI, and companies that are benefiting from the shift in manufacturing and chip computing.1. The semiconductor industry benefiting from Generative AI:The semiconductor industry is on the upswing. In Q2, revenue levels across the global se

Federal Reserve Chairman Powell, in the US Congress hearings on March 7-8, warned that if US economic data continue to show strength, it could prompt the Fed to increase interest rates at a faster pace, possibly exceeding the 4.9%-5.6% range set at the December FOMC meeting.The probability for 50 basis points in March FOMC meeting raised to nearly 78%; US 2Y Treasury yield, which directly reflected rate hike expectations, broke 5%. The two factors show that Fed will accelerate rate hikes rather than pivot.Source: CME FedWatchHowever, what Fed officials say is less important than whether US employment data cools down. As of January 2023, US job openings, while beginning to decline, still stands at 6.5%. Lik

I. Year-to-date (2023/01/01 - 2023/01/27) performance review1. Major assets returnsSource: Bloomberg; dollar-denominated returnsSo far this year, as of January 27, the majority of global assets have risen favorably. Bitcoin is the top gainer. $NASDAQ Golden Dragon China Index(HXC)$ and $HSI(HSI)$ representing overseas Chinese stocks gained much; while the $CSI300(000300.SH)$ and CSI 500 were up nearly 10% before the Chinese New Year holiday break.Expectations of a recovery in China are gradually shining into reality, with consumption and travel data during the Chinese New Year period, both sho

In the first week of 2023, two giants of US and HK stock market - the declining $Apple(AAPL)$ (orange K-line) and the bottom-bouncing $TENCENT(00700)$ (red and green K-line) converge in terms of their 10-year returns.Investors who have read the Panning for Gold II: US, Eurozone, China 2023 Economic Outlook can probably understand the expected development of the economic cycle in the US and China, resulting in a "strong Hong Kong stocks, weak US stocks" scenario that is not common in the past decade.Last week's macroeconomic data and the Fed's moves reinforced the ex

Tonight at 9:30, the US December CPI data will be released. As the last key data for the year 2022, it will directly affect the Fed's interest rate hike path and is highly concerned by investors around the world.Due to the recent sustained low crude oil prices, inflation pressure has been further released. Currently, the market is relatively optimistic about this CPI data and generally believes that inflation growth will slow down further. The consensus expectation for CPI YoY is 6.5%, lower than the previous value of 7.1%; the consensus expectation for core CPI MoM is 5.7%, also lower than the previous value of 6%.Source: TradingEconomics1. AutoGoldman Sachs sees a significant drop in auto prices.On the one hand, used cars saw a net price decline in December auctions, with the u

Last weekend, OPEC+ announced a production cut, causing a surge in crude oil prices and making the current market narrative more confusing.On the one hand, the footsteps of the recession are getting closer. Despite the temporary relief of the European and American banking crises after the Fed provided temporary liquidity, the erosion of bank profit margins and the tightening of credit in a high-interest-rate environment have not fundamentally changed.On the other hand, stagflation has not ended. The rise in crude oil prices is likely to prolong the high-inflation level and limit the Fed's pivot.How should we allocate our investment portfolio?I. Q1 Asset Performance Review1. Major asset returnsSource: Bloomberg. Denominated in USD; 2023/1/1-2023/3/31Looking back at Q1 2023, major global ass