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>The Federal Reserve raised interest rates by another 25 basis points, expecting inflation to come down 'not so quickly.'</li>
<li>Powell feeds the overly-enthusiastic market narrative by betting against history, anticipating that the current Fed tightening cycle will not significantly push up the US unemployment rate.</li>
<li>Powell and the Fed dodged accountability back in February, and the PacWest collapse hours after stating banking 'conditions have broadly improved' is very painful and disturbing.</li>
</ul>


The Federal Reserve raised interest rates by another 25 basis points, expecting inflation to come down 'not so quickly.'
Powell feeds the overly-enthusiastic market narrative by betting against history, anticipating that the current Fed tightening cycle will not significantly push up the US unemployment rate.
Powell and the Fed dodged accountability back in February, and the PacWest collapse hours after stating banking 'conditions have broadly improved' is very painful and disturbing.


Powell Press Conference: Persistent and Painful

<ul>
<li>Operating leverage works both ways. With the gap between earnings growth and sales growth now negative, stock markets have entered a phase of 'reverse operating leverage.'</li>
<li>To determine the impact of reverse operating leverage on future equity market returns, we looked at all instances when sales growth topped earnings growth since 2000.</li>
<li>As it turns out, a recession determines whether 'reverse operating leverage' hits equities or not. And since we expect a recession...</li>
</ul>


Operating leverage works both ways. With the gap between earnings growth and sales growth now negative, stock markets have entered a phase of 'reverse operating leverage.'
To determine the impact of reverse operating leverage on future equity market returns, we looked at all instances when sales growth topped earnings growth since 2000.
As it turns out, a recession determines whether 'reverse operating leverage' hits equities or not. And since we expect a recession...


Operating Leverage in Reverse: The Impact on Equity Markets

<ul>
<li>‘We lower the weight of equities. With markets pricing several Fed rate cuts, valuation rising, and earnings expectations too upbeat, catalysts for further increases are vanishing. </li>
<li>After the significant decline in March building permits, the implied recession odds linked to this indicator are rising again.</li>
<li>There's a classic example of reverse operating leverage going on: earnings growth is negative, while sales growth is positive. Most of the time, this is followed by a recession.</li>
</ul>


‘We lower the weight of equities. With markets pricing several Fed rate cuts, valuation rising, and earnings expectations too upbeat, catalysts for further increases are vanishing. 
After the significant decline in March building permits, the implied recession odds linked to this indicator are rising again.
There's a classic example of reverse operating leverage going on: earnings growth is negative, while sales growth is positive. Most of the time, this is followed by a recession.


Weekly Market Monitor (16) - The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet

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>Latest weekly Global Liquidity data reveal a sharp hiccup caused by tax payments in the US and repo timing issues in China  </li>
<li>This does not foretell of any future serious disruption to our expectations for easier liquidity conditions later this year and next  </li>
<li>The jump in America’s TGA at the Fed signals weak tax revenues and warns that the debt-ceiling may be hit sooner, possibly by June/ July</li>
</ul>


Latest weekly Global Liquidity data reveal a sharp hiccup caused by tax payments in the US and repo timing issues in China  
This does not foretell of any future serious disruption to our expectations for easier liquidity conditions later this year and next  
The jump in America’s TGA at the Fed signals weak tax revenues and warns that the debt-ceiling may be hit sooner, possibly by June/ July


Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?

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

Powell Press Conference: Persistent and Painful

Powell is not thinking about rate cuts, contrary to what markets believe. Unfortunately, he also thinks banking conditions have 'broadly improved.'

Jeroen Blokland

Operating Leverage in Reverse: The Impact on Equity Markets

A recession determines the impact of 'reverse operating leverage' (earnings growth less than sales growth) on future equity market returns. And...

Jeroen Blokland

Weekly Market Monitor (16) - The Odds of a Recession Is Rising; Earnings Just Don’t Know It Yet

Welcome to the weekly Market Monitor, keeping you updated on the week’s most important charts and developments in financial markets.

Jeroen Blokland

Is Global Liquidity Already Threated By America’s Upcoming Debt Ceiling?

Latest weekly Global Liquidity data reveal a sharp hiccup. It warns that that America's debt-ceiling may be hit sooner, possibly by June. It does...

Michael J. Howell