Global Multi-Asset Investment Strategist, True Insights

Jeroen Blokland

Global Multi-Asset Investment Strategist

Build Well-Diversified Multi-Asset Portfolios

True Insights

Our research helps investors build well-diversified multi-asset portfolios and profit from market developments. In addition, our unique and proven Macro – Sentiment – Valuation (MSV) investment framework ensures a consistent flow of new investment opportunities. Together with our market views, these opportunities will be reflected in our live ETF-based Global Multi-Asset Portfolios.

Macroeconomics

<ul>
<li>Comparable to the China Growth Scare of 2015-2016, the Manufacturing PMI is below 50, imports are falling, and deflation worries are rising.</li>
<li>The real estate crisis is worse than in 2015-2016, with housing prices falling again, floor space under construction declining, consumer confidence near historic lows, and LGFV financing issues increasing.</li>
<li>Unlike 2015 (and 2022), the current depreciation of the Chinese Yuan has not (yet) been accompanied by falling stock prices. </li>
</ul>


Comparable to the China Growth Scare of 2015-2016, the Manufacturing PMI is below 50, imports are falling, and deflation worries are rising.
The real estate crisis is worse than in 2015-2016, with housing prices falling again, floor space under construction declining, consumer confidence near historic lows, and LGFV financing issues increasing.
Unlike 2015 (and 2022), the current depreciation of the Chinese Yuan has not (yet) been accompanied by falling stock prices. 


China: An Accident Waiting to Happen? Comparing the Current Chinese Economy to the One in 2015

Cross Asset Strategy

<ul>
<li>Unlike headline inflation, US Core CPI will likely continue to drop in the remainder of the year, but equity markets are way ahead of themselves again.</li>
<li>Our Fear &amp; Frenzy Sentiment Index has moved further into Frenzy territory, indicating the current rally is at imminent risk.</li>
<li>China's economic momentum is vanishing with headline inflation at zero, while exports are down 5% from their peak, signaling the global economy will not come to the rescue.</li>
</ul>


Unlike headline inflation, US Core CPI will likely continue to drop in the remainder of the year, but equity markets are way ahead of themselves again.
Our Fear &amp; Frenzy Sentiment Index has moved further into Frenzy territory, indicating the current rally is at imminent risk.
China's economic momentum is vanishing with headline inflation at zero, while exports are down 5% from their peak, signaling the global economy will not come to the rescue.


Equity Markets – Is Icarus Flying Too Close to the Sun?

<ul>
<li>The risk premium of equity asset classes has further declined. The risk premium on US Equities is now just 3.1%, which is very unattractive.</li>
<li>The risk premium of equity asset classes has further declined. The risk premium on US Equities is now just 3.1%, which is very unattractive.</li>
<li>Our ‘Bellwether EPS indicator’ points to a year-on-year earnings-per-share decline of nearly 22%, leaving little room for earnings growth to remain positive.</li>
</ul>


The risk premium of equity asset classes has further declined. The risk premium on US Equities is now just 3.1%, which is very unattractive.
The risk premium of equity asset classes has further declined. The risk premium on US Equities is now just 3.1%, which is very unattractive.
Our ‘Bellwether EPS indicator’ points to a year-on-year earnings-per-share decline of nearly 22%, leaving little room for earnings growth to remain positive.


Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>After a strong 1H23, global equities were down this week. The MSCI World Index fell 1.42%, while the S&amp;P 500 dropped 1.06%.</li><li>The decline was driven by strongerthan-expected labor market data and concerns that this may make the Fed less accommodating.</li><li>The Russell 2000 finished the week down 1.32%, while the NASDAQ declined 0.92%.</li></ul>

After a strong 1H23, global equities were down this week. The MSCI World Index fell 1.42%, while the S&amp;P 500 dropped 1.06%.The decline was driven by strongerthan-expected labor market data and concerns that this may make the Fed less accommodating.The Russell 2000 finished the week down 1.32%, while the NASDAQ declined 0.92%.

<ul>
<li>Chinese Local Government Financing Vehicles, representing roughly 50% of the total Chinese government debt, face a maturity wall of CNY 5.5 trillion this year.</li>
<li>We expect no official defaults, implying an ongoing accommodative stance of the PBoC, further diverging from monetary policy in the rest of the world.</li>
<li>A ‘kick the can down the road’ strategy, keeping insolvent LGFVs artificially alive results in misallocation of capital, lower GDP growth, lower inflation, and pressure on risk assets.</li>
</ul>


Chinese Local Government Financing Vehicles, representing roughly 50% of the total Chinese government debt, face a maturity wall of CNY 5.5 trillion this year.
We expect no official defaults, implying an ongoing accommodative stance of the PBoC, further diverging from monetary policy in the rest of the world.
A ‘kick the can down the road’ strategy, keeping insolvent LGFVs artificially alive results in misallocation of capital, lower GDP growth, lower inflation, and pressure on risk assets.


Chinese LGFVs Contribute to Lower Growth and Disinflation

United States

The MSCI World Index is a free-float weighted equity index. It was developed with a base value of 100 as of December 31, 1969. MXWO includes developed world markets, and does not include emerging markets. MXWD includes both emerging and developed markets.

MSCI World Index (MXWO INDEX)

China: An Accident Waiting to Happen? Comparing the Current Chinese Economy to the One in 2015

Current economic conditions in China increasingly resemble those of 2015-2016, with some looking worse than eight years ago.

Jeroen Blokland

Equity Markets – Is Icarus Flying Too Close to the Sun?

Markets are incredibly eager to discount lower inflation, pushing the Fear & Frenzy Sentiment further into Frenzy territory.

Jeroen Blokland

Markets Better Not Focus on Valuation

Valuation measures reveal pricy equities and cheaper Treasuries. A comprehensive overview of valuation across asset classes.

Jeroen Blokland

Industry Report - Cannabis

The decline was driven by strongerthan-expected labor market data and concerns that this may make the Fed less accommodating. The Russell 2000...

Water Tower Research

Chinese LGFVs Contribute to Lower Growth and Disinflation

The debt issues at Chinese Local Government Financing Vehicles lead to a misallocation of capital, lower growth, disinflation, and pressure on risk...

Jeroen Blokland