FrontierView (part of FiscalNote)’s Post

As we get to the end of the week in Singapore, here are a few thoughts on macro, markets, and politics: #Markets are seeing a V-shaped recovery currently, and a combination of good US inflation data (soft 0.2% m-o-m) and robust retail sales will see the #Fed cut rates by between 50-75bps by year-end, starting in September. #Harris is still doing well in polls and betting odds. She’ll probably get another bump going into and after the #DNC. Harris is leading in polls in key swing states #Michigan and #Pennsylvania. Lots of central banks are getting on with cuts and even surprising some analysts as they focus on supporting growth now that inflation looks better. #Chinese data came in soft with weak prints in credit growth, retail sales, unemployment, and house prices. Our below-consensus growth forecast of 4.7% still looks good to us. GDP releases out of Japan and UK showed mixed growth. Nothing stellar, but nothing terrible either. From a geopolitical perspective, the world is still waiting to see what Iran does in terms of retaliation. They’ll have to establish deterrence, but I’m hoping this low-key approach is part of a de-escalatory strategy. #Ukraine's incursion into Russian territory continues to advance. This definitely helps Ukraine’s bargaining position in the event of a deal. Over the next few days, I’ll be keeping an eye out for the Harris economic agenda, flash PMIs, and the #JacksonHole Economic Symposium. #BMI #EmergingMarkets #Politics

Long-term value but short-term headwinds in Japan We're thrilled to share that our Partner, Polka Mishra, appeared on Bloomberg Markets Asia last Friday, offering insightful perspectives ahead of the Bank of Japan’s policy meeting and current happenings in Asia markets. Here are some key takeaways from her interview: • Japan: The long-term prospects in Japan remain strong. However weak consumer and business confidence poses significant challenges to #BOJ’s in kick-starting the tightening • US: #Fed remains hawkish. Rate cuts are unlikely until data is supportive consistently • #China: Consumer confidence in China is low, with the real estate market presenting ongoing challenges. • #India: India remains a growth story with policy continuity in focus. All eyes on the upcoming budget Thanks Haslinda Amin and Shery Ahn. Watch the full interview here: https://lnkd.in/gue582_6 #marketoutlook #asia

🌏 In our Q2 Asia Corporates Newsletter, our Asia Pacific research team delves into the macro backdrop currently setting the scene for corporates in the region. 💲 The Federal Reserve is looking set for a delayed, potentially more drawn out and eventually shallower interest rate cycle than in the past. This position puts central banks in Asia in a bind, as higher for longer core rates and a stronger US dollar make it harder for them to respond to their domestic imperatives of growth and inflation. 🛢️ Upside risks to oil are again potentially upsetting the balance of both trade and inflation in the region. Also, while elections in Asia are mostly done, the political calendar is set to heat up in the second half of the year in the lead-up to the US presidential election. This all points to the next few months being likely challenging in Asia. 🚗 However, there are also key opportunities like the Goldilocks-ish macro environment in India, investments being made in ASEAN to move up the semiconductor value chain and Thailand’s efforts to become a regional export hub for Electric Vehicles. For more insights, registered clients can read our full Q2 Asia Corporate Newsletter here: https://lnkd.in/emn6xKCs #dbresearch #electricvehicles #Asia #AsiaPacific Deutsche Bank Sameer Goel Tim Baker Michael Hsueh Liam Fitzpatrick Perry Kojodjojo Bryant Xu Joey Chung

Chinese markets rose 5%, Hong Kong markets up 2.5%, continuing last week's positive trend. Chinese stimulus measures approaching half of the 2008 GFC intervention. Chinese market cap increased by $1.3 trillion, Hong Kong by $500 billion over the last week. September Chinese manufacturing PMI beat expectations at 49.8. Three major Chinese cities removed property restrictions for home buyers. Surge in new brokerage account openings in China over the weekend. Japanese indices down 4% due to new PM Shigeru Ishiba's selection. USD/JPY retreated to around 142 on expectations of BOJ policy normalization. BOJ Governor Kazuo Ueda states monetary policy will depend on economic data. Upcoming Tankan survey crucial for assessing Japanese business health. US PCE index shows continued deflationary trend, but older economic data revised upward. India watching FII flows for signs of EM fund movement between China and India. Rate cuts expected to be a dominant theme in Q4 and the new year. October historically weak for US equities, especially pre-election. Close US election contest may lead to market volatility. Recommendation to stay invested despite expected market fluctuations. #market

Easy to read summary of the 3rd quarter and market outlook below from our CIO Sanjay Rijhsinghani Speaking with fund managers from BlackRock and Baillie Gifford this week regarding Europe and Asian markets, it is pleasing to know we have good exposure to these regions and they expect both to perform well looking ahead, the latter benefitting from a weaker $ and Chinese stimulus as Sanjay discusses. #investmentmanagement #wealthmanagement

This week's Global Credit Bullets ➠ https://lnkd.in/eQKpsQVs : Markets are turning weaker as recession fears mount. Weak manufacturing data in Europe, rising unemployment rate in US, and the absence of fiscal stimulus in China are turning into broad equity weakness. At its July meeting, the Federal Reserve has guided markets for a beginning of its cutting cycle in September. The Bank of Japan surprised markets by hiking interest rates 15bp to 0.25% at the July meeting.

The ENTIRE world is doing better than the US. I wonder why? Moderated means fell significantly for those in the cheap seats. 😂😂 The Ratio moderated 🔻🔻🔻🔻in the USA (1.05 to 0.93) The Ratio for the global Risk style is now above 1.00 By region, the Earnings Revision Ratio remains highest for Japan (1.32) ⬆️⬆️⬆️⬆️where upgrades significantly outnumber downgrades. The Ratio moderated in the USA (1.05 to 0.93) 🔻🔻🔻🔻but improved in Europe (0.73 to 0.86) ⬆️⬆️⬆️⬆️to a seven-month high. Despite downgrades outnumbering upgrades 2-to-1 in China, the Ratio improved⬆️⬆️⬆️ in Emerging Markets (0.56 to 0.66) ⬆️⬆️⬆️⬆️and Asia Pac ex-Japan (0.50 to 0.63)⬆️⬆️⬆️⬆️. The Risk style now has a Ratio above 1.00.

With economic data continuing to weaken, the selloff in AI related names following poor result and the unwind of the yen carry trade, this morning August 5th, the Vix (volatility index) was at an incredibly high 66 following a 12% selloff in the Japan stock market. The Vix has only been higher during the Global Financial Crisis and Covid. The Vix along with some other technical metrics I follow became oversold which to me indicates the odds are high we saw the short-term lows for the equity markets at the lows on Monday. However, the one potential event I worry about leading to new lows is whether this unwind of the yen carry trade leads to some large highly levered financial firm failing much like Lehman or LTCM. This is not my base case given the sharp rally in bonds has reliquefied the long-term treasuries in the banking system (the exact opposite of when Silicon Valley Bank failed last year), loosened credit conditions and helped put a floor under the interest rate sensitive beleaguered commercial real estate market. From a longer term perspective vs the next 24 hours, I do not believe we get a recession which the market seems to be discounting. There are still over 10% more job openings than people unemployed, low unemployment at 4.3% and a Fed that was already expected to cut multiple times this year.