In today’s briefing:
- Positioning Watch – Is This a Bear Market Rally or the Beginning of a Bull Run?
- Europolitics Watch – A Continued European Surge?
- Japan’s Corporate Balance Sheet Recession: Still Impacting Attitudes Towards Risk-Taking
Positioning Watch – Is This a Bear Market Rally or the Beginning of a Bull Run?
- Equity positioning remains very bearish despite the recent spike in price action
- The EUR remains a crowded long in FX space, while the AUD and JPY are still short
- The market continues to expect market rates to increase despite falling inflation
Europolitics Watch – A Continued European Surge?
- European equities have seen an incredible start to 2023 on top of strong performance in late 2022.
- But European manufacturing and tech finds itself under pressure from massive public investments in both the US and China.
- What to make of the EU’s response and how is the outlook for Europe?
Japan’s Corporate Balance Sheet Recession: Still Impacting Attitudes Towards Risk-Taking
- Despite Abenomics, Japan’s non-financial corporations have continued to hoard cash since 2005 to its current level of 44% of GDP. Overseas investment has increased since 2005, indicating higher profitability.
- Although share buybacks have surged in recent years, they remain significantly below US levels, but are arguably more sustainable due to high cash balances.
- Japanese equities are cheap on a cross-border basis, but corporations’ shift to focus on shareholder value under Abenomics has not produced richer valuations.
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