Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<ul>
<li>Real GDP accelerated to 2.8%QoQsaar growth in Q2CY24 (from 1.4% in Q1), with sharp QoQ acceleration in PCE, investment and government spending, and restocking after three quarters of destocking. </li>
<li>In YoY terms, real GDP grew 3.1%YoY in Q2CY24 led by 5.8%YoY growth in gross investment. Core PCE inflation edged up to 2.63% YoY in Jun'24 (from May's 2.62%YoY). </li>
<li>The annualized rise in core PCE in H1CY24 was 3.33%, with only one month (May'24) of less than 2%MoM (annualized) increase -- insufficient to allow a rate cut before Sep'24. </li>
</ul>


Real GDP accelerated to 2.8%QoQsaar growth in Q2CY24 (from 1.4% in Q1), with sharp QoQ acceleration in PCE, investment and government spending, and restocking after three quarters of destocking. 
In YoY terms, real GDP grew 3.1%YoY in Q2CY24 led by 5.8%YoY growth in gross investment. Core PCE inflation edged up to 2.63% YoY in Jun'24 (from May's 2.62%YoY). 
The annualized rise in core PCE in H1CY24 was 3.33%, with only one month (May'24) of less than 2%MoM (annualized) increase -- insufficient to allow a rate cut before Sep'24. 


US: Strong Growth, Core PCE Inflation at 2.6%YoY Preclude an Immediate Rate Cut

<ul>
<li>After a 0.99%MoM annualised rise in May'24, core PCE inflation eased to 2.57%YoY -- lower than the 2.6%YoY end-CY24 projection that the FOMC believed was compatible with 3 rate cuts. </li>
<li>While the FOMC initially signalled QT in Jun'22, base money increased each month during Jul'23-Feb'24, contributing to higher inflation. Contracting base money since Mar'24 was key to moderating MoM inflation.</li>
<li>Core PCE will likely rise 2%QoQ (annualised) in Q2CY24, and 2.5%YoY in Jun'24. The release of those numbers six days before FOMC decision (31/7/24) will likely trigger Jul'24 rate cut. </li>
</ul>


After a 0.99%MoM annualised rise in May'24, core PCE inflation eased to 2.57%YoY -- lower than the 2.6%YoY end-CY24 projection that the FOMC believed was compatible with 3 rate cuts. 
While the FOMC initially signalled QT in Jun'22, base money increased each month during Jul'23-Feb'24, contributing to higher inflation. Contracting base money since Mar'24 was key to moderating MoM inflation.
Core PCE will likely rise 2%QoQ (annualised) in Q2CY24, and 2.5%YoY in Jun'24. The release of those numbers six days before FOMC decision (31/7/24) will likely trigger Jul'24 rate cut. 


US: Receding Inflation Has Put 3 Rate Cuts Back in Play for 2024

Cross Asset Strategy

<ul>
<li>Pres. Biden's disastrous debate performance (in which he looked senile and cognitively incapacitated) has led Democrats to call on him to step aside in favour of an alternate Democrat nominee.</li>
<li>In 1968, LBJ stepped aside before most primaries, and VP Humphrey won nomination at the convention. He lost the general mainly because third party candidate Wallace ate into Democrat votes. </li>
<li>Trump landslide would be inflationary (because of 10% tariffs on all imports, more on China), plus the embarrassment of having a convicted felon as president. Near-term negative for US. </li>
</ul>


Pres. Biden's disastrous debate performance (in which he looked senile and cognitively incapacitated) has led Democrats to call on him to step aside in favour of an alternate Democrat nominee.
In 1968, LBJ stepped aside before most primaries, and VP Humphrey won nomination at the convention. He lost the general mainly because third party candidate Wallace ate into Democrat votes. 
Trump landslide would be inflationary (because of 10% tariffs on all imports, more on China), plus the embarrassment of having a convicted felon as president. Near-term negative for US. 


Biden's Catastrophic Debate Likely to Lead to 1968-Repeat; Can It End Differently?

<ul>
<li>FOMC signalled in Mar’24 that 2.6%YoY core PCE inflation would allow three rate cuts in CY24. They now expect core PCE inflation of 2.8%YoY (above the Apr’24 reading of 2.75%YoY). </li>
<li>Core CPI inflation rose 0.2%MoM in May’24, suggesting a similarly benign outcome for core PCE. US M2 contracted for 16 months (Dec'22-Mar’24), an unprecedented tightening compensating for M2-excesses of Mar’20-Feb’22. </li>
<li>Aggressive QT in Mar-Apr’24 successfully squeezed out inflation, and core PCE inflation will likely stay below 2.6%YoY in H2CY24, allowing two 25bp cuts in the Fed Funds rate in CY24.  </li>
</ul>


FOMC signalled in Mar’24 that 2.6%YoY core PCE inflation would allow three rate cuts in CY24. They now expect core PCE inflation of 2.8%YoY (above the Apr’24 reading of 2.75%YoY). 
Core CPI inflation rose 0.2%MoM in May’24, suggesting a similarly benign outcome for core PCE. US M2 contracted for 16 months (Dec'22-Mar’24), an unprecedented tightening compensating for M2-excesses of Mar’20-Feb’22. 
Aggressive QT in Mar-Apr’24 successfully squeezed out inflation, and core PCE inflation will likely stay below 2.6%YoY in H2CY24, allowing two 25bp cuts in the Fed Funds rate in CY24.  


US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

Market & Forensics Analyst, Beat the Street

Nimish Maheshwari

Market & Forensics Analyst

Beat the Street

Beat The Street was founded by Nimish Maheshwari and Sudarshan Bhandari, both of whom are Chartered Accountants by Profession, known for their expert analysis in the fields of Business, Sectoral analysis, and Corporate governance.

With a strong social media presence of 45,000+ Subscribers across various platforms, they are considered trusted voices in the industry. Their insights and analysis have been featured in some of India’s most prominent publications, including the Economic Times, Dalal Street Investment Journal, The Morning Context, and The Ken.

Their analysis on Bankrupt & Insolvent companies has been instrumental in saving investors from significant losses. They have a keen eye for identifying red flags and has identified exclusive redflags earlier in Vedanta, Nykaa, Dhani Services, Adani and many more.

Read Business Not Stock Prices

Thematic (Sector/Industry)

<ul>
<li>JPMorgan's new fund focuses on obesity treatments, especially popular yet scarce GLP-1 drugs</li>
<li>Chinese automakers sold more cars than US brands, marking a significant market shift</li>
<li>Tesla shares rise as Musk anticipates shareholder approval of his controversial $56 billion pay package</li>
</ul>


JPMorgan's new fund focuses on obesity treatments, especially popular yet scarce GLP-1 drugs
Chinese automakers sold more cars than US brands, marking a significant market shift
Tesla shares rise as Musk anticipates shareholder approval of his controversial $56 billion pay package


#18Business Buzz: JPMorgan's $500M Biotech Fund, China's Car Sales, Tesla's Pay Package Approval

United States

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Dow Jones Industrial Average (INDU INDEX)

Dow Jones Industrial Average (INDU INDEX)

US: Strong Growth, Core PCE Inflation at 2.6%YoY Preclude an Immediate Rate Cut

Core PCE increased 3.33% annualized in H1CY24, and was up 2.63%YoY in Jun'24. With real GDP growing 2.8%QoQsaar and 3.1%YoY in Q2CY24, the FOMC is...

Prasenjit K. Basu

US: Receding Inflation Has Put 3 Rate Cuts Back in Play for 2024

Core PCE rose 0.99%MoM annualised in May'24, as genuine QT occurred in Apr-May'24. The 25th July release of 2%QoQ and 2.5%YoY rises in core PCE...

Prasenjit K. Basu

Biden's Catastrophic Debate Likely to Lead to 1968-Repeat; Can It End Differently?

Biden's cognitively-challenged debate performance increases the probability of a Trump landslide, with 10% import tariffs disrupting the world...

Prasenjit K. Basu

US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

US M2 contraction (Dec'22-Mar'23) helped offset previous excesses. Core PCE inflation to stay below 2.6%YoY in H2CY24 (belying FOMC's latest...

Prasenjit K. Basu

#18Business Buzz: JPMorgan's $500M Biotech Fund, China's Car Sales, Tesla's Pay Package Approval

JPMorgan launches fund for obesity treatments, Chinese automakers outsell US brands, Tesla shares climb on Musk's pay package anticipation.

Nimish Maheshwari

US: Strong Growth, Core PCE Inflation at 2.6%YoY Preclude an Immediate Rate Cut

Core PCE increased 3.33% annualized in H1CY24, and was up 2.63%YoY in Jun'24. With real GDP growing 2.8%QoQsaar and 3.1%YoY in Q2CY24, the FOMC is...

Prasenjit K. Basu

US: Receding Inflation Has Put 3 Rate Cuts Back in Play for 2024

Core PCE rose 0.99%MoM annualised in May'24, as genuine QT occurred in Apr-May'24. The 25th July release of 2%QoQ and 2.5%YoY rises in core PCE...

Prasenjit K. Basu

Biden's Catastrophic Debate Likely to Lead to 1968-Repeat; Can It End Differently?

Biden's cognitively-challenged debate performance increases the probability of a Trump landslide, with 10% import tariffs disrupting the world...

Prasenjit K. Basu

US FOMC Projections Too Pessimistic; Two Rate Cuts Likely in 2024 as Inflation Abates

US M2 contraction (Dec'22-Mar'23) helped offset previous excesses. ​Core PCE inflation to stay below 2.6%YoY in H2CY24 (belying FOMC's latest...

Prasenjit K. Basu

#18Business Buzz: JPMorgan's $500M Biotech Fund, China's Car Sales, Tesla's Pay Package Approval

​JPMorgan launches fund for obesity treatments, Chinese automakers outsell US brands, Tesla shares climb on Musk's pay package anticipation.

Nimish Maheshwari

US M2 contraction (Dec'22-Mar'23) helped offset previous excesses. Core PCE inflation to stay below 2.6%YoY in H2CY24 (belying FOMC's latest...

JPMorgan launches fund for obesity treatments, Chinese automakers outsell US brands, Tesla shares climb on Musk's pay package anticipation.