Global equity markets dropped dramatically on Tuesday, following the release of the US inflation numbers for August. The 12-month inflation number came in at 8.3% (against the median estimate of 8.1%), easing from July’s annual rate of 8.5%. At first glance, these seemingly small movements in the numbers should not have caused the S&P 500…
While Europe and the UK face structural challenges and a Russia-induced energy crisis, a recently published report highlighted the stellar performance of US corporates. According to MRB Partners, profits surged in the second quarter to an all-time high relative to GDP, “underscoring the extraordinary pricing power and global prominence of US corporations. Profits have benefited…
While last week’s symposium at Jackson Hole was all about inflation, the mood of investors across the world in the aftermath of Powell’s speech, was one of deflation. The stock market rally of 17.7% that began on June 16 pivoted to recession anxiety. Market reactions were somewhat sharper than we had expected, as central bank…
The Economist recently published an article on whether unemployment really has to rise to bring down inflation. Persistently high inflation will remain unresolved as long as rapid growth in wages continues to power a spending boom. Higher wages cause embedded inflation, and this is what most troubles the Fed, and what it seeks to address…
On 13 May, in our Newsflash entitled Searching for the bear market trough, we wrote that a signal for the turning points in bear markets is typically when there is a total vacuum of optimism, and when the prevailing news is overwhelmingly pessimistic. We penned this at a time when clients and even global investment…
On Wednesday, the US released its inflation figure of 8.5% for the 12 months ending July, against the consensus expectation of 8.7%, this being the lowest year-on-year number in recent months and the first sign the Fed’s aggressive rate hiking policy may be moderating inflation. On the back of this marginal decease in the inflation…
Economists believe that people’s expectations are an important influence in their decisions, whether these be to invest in expanding a business, or to defer or accelerate purchases. Economist John Maynard Keynes labelled the role of expectations “animal spirits.” Consequently, what we think may happen in an economy in the future could determine how we act…
On Wednesday, the US Fed hiked its benchmark rate by 75 basis points for a second consecutive month. This in the face of the June inflation number, which came in at a shock 9.1% and above the consensus estimate of 8.8%. Given that GDP fell by 0.9% in the second quarter, after declining in the…
In recent months, we have often faced questions from clients around the likely duration of the currently depressed equity market conditions and what the prospects for a meaningful market recovery may be. Of course, we are not able to address these concerns with any degree of conviction. However, we have previously written about markets being…
