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>A pause in interest rate hikes drove global equities higher.</li><li>Last week, the MSCI World Index gained 2.64%, while the S&amp;P 500 increased 2.22%.</li><li>The S&amp;P 500 earned its fifth consecutive positive week and is now 24.68% off its October 12, 2022, low.</li></ul>

A pause in interest rate hikes drove global equities higher.Last week, the MSCI World Index gained 2.64%, while the S&amp;P 500 increased 2.22%.The S&amp;P 500 earned its fifth consecutive positive week and is now 24.68% off its October 12, 2022, low.

The Highlights : Cannabis News for the Week Ending May June 16, 2023

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.

Cross Asset Strategy

<ul>
<li>Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.</li>
<li>We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.</li>
<li>In addition, we close our inflation-linked bond and Yen trade.</li>
</ul>


Our Fear &amp; Frenzy Sentiment Index hit Frenzy for the first time during this rally.
We marginally lower the weight of Developed Market Equities since we are already underweight risky assets, which, unlike 2022, has not paid off this year.
In addition, we close our inflation-linked bond and Yen trade.


Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

<ul>
<li>For the first time in the current melt-up, our Fear &amp; Frenzy Sentiment has touched ‘Frenzy’ territory, suggesting the rally has run its course, at least temporarily.</li>
<li>China has cut rates and is contemplating more stimulus to bolster sectors like real estate and domestic demand. Meanwhile, the economy continues to slow.</li>
<li>In a surprise move, Blackrock has filed for a spot Bitcoin ETF with Coinbase as a custodian!</li>
</ul>


For the first time in the current melt-up, our Fear &amp; Frenzy Sentiment has touched ‘Frenzy’ territory, suggesting the rally has run its course, at least temporarily.
China has cut rates and is contemplating more stimulus to bolster sectors like real estate and domestic demand. Meanwhile, the economy continues to slow.
In a surprise move, Blackrock has filed for a spot Bitcoin ETF with Coinbase as a custodian!


The Weekly Market Monitor (24) – Our Key Sentiment Index Signals Market FRENZY

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>With core PCE and core CPI both rising more than 4.8%MoM annualised in recent months, and up 4.7%YoY and 5.3%YoY respectively, the pause could only be justified with forward hawkishness.  </li>
<li>ISM manufacturing PMI below 50 for six months, manufacturing new orders below 50 for 9 months, and Services PMI at 50.3 now, suggest that the US is already in recession.</li>
<li>We continue expecting the FedFunds rate to peak at 5.5%, with the Apr-Sep'23 recession and lagged impact of rate hikes enabling core PCE inflation to subside to 3%YoY by end-2023.</li>
</ul>


With core PCE and core CPI both rising more than 4.8%MoM annualised in recent months, and up 4.7%YoY and 5.3%YoY respectively, the pause could only be justified with forward hawkishness.  
ISM manufacturing PMI below 50 for six months, manufacturing new orders below 50 for 9 months, and Services PMI at 50.3 now, suggest that the US is already in recession.
We continue expecting the FedFunds rate to peak at 5.5%, with the Apr-Sep'23 recession and lagged impact of rate hikes enabling core PCE inflation to subside to 3%YoY by end-2023.


FOMC's Hawkish Pause: Recession and a FF Peak of 5.5% to Finally Restrain Core PCE

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


<ul>
<li>
Global Liquidity is a crucial driver of investment markets, and US Fed liquidity refuses to slow down despite fears that policy interest rates will stay high</li>
<li>The key turning-point was last year's British gilt crisis. This was reinforced by the SVB and CSFB banking problem and prompted US banks' reserves to start rising</li>
<li>This US 'Stealth' QE will be underscored by greater Treasury bill issuance, which historically has led the Global Liquidity by six months</li>
</ul>



Global Liquidity is a crucial driver of investment markets, and US Fed liquidity refuses to slow down despite fears that policy interest rates will stay high
The key turning-point was last year's British gilt crisis. This was reinforced by the SVB and CSFB banking problem and prompted US banks' reserves to start rising
This US 'Stealth' QE will be underscored by greater Treasury bill issuance, which historically has led the Global Liquidity by six months


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)

The Highlights : Cannabis News for the Week Ending May June 16, 2023

A pause in interest rate hikes drove global equities higher. Last week, the MSCI World Index gained 2.64%, while the S&P 500 increased 2.22%.

Water Tower Research

Changes in Portfolio Weights: Sentiment Hits ‘Frenzy,’ We Comply

Our Fear & Frenzy Sentiment Index hit Frenzy for the first time during this rally, telling us to lower the weight of equities.

Jeroen Blokland

The Weekly Market Monitor (24) – Our Key Sentiment Index Signals Market FRENZY

Our Fear & Frenzy Sentiment Index is on the verge of entering FRENZY territory, which would be the first time during the latest rally!

Jeroen Blokland

FOMC's Hawkish Pause: Recession and a FF Peak of 5.5% to Finally Restrain Core PCE

We've FOMC critics since Dec'21. ISM manuf'g new orders <50 for 9 months affirm the US is in recession. That, with the FF rate at 5.5% by Sep'23,...

Prasenjit K. Basu

Is There A ‘Stealth’ QE At The Fed?!

Stealth QE is starting. US banks' reserves are edging higher and the likely jump in bill issuance has historically boosted Global Liquidity. Keep...

Michael J. Howell