Research Summary
- Market Recap (07 Jul – 11 Aug, 2023): Broad indices ended in the red for a second week, with pressures from higher bond yields and global economic data. Chinese Import and Export data showed a significant slowdown, and the US banned investments in certain Chinese tech companies.
- Energy Sector: Natural Gas soared, particularly European Natural Gas, on news of strikes in Australia that could disrupt ~9.5% of global LNG supply.
- Macro Roundup – Inflation: Inflation remains an odd story with CPI numbers coming in lower than expected but a slight uptick in headline numbers. Produce prices came in hotter than expected, and wage inflation is a concern for the Fed.
- Global Inflation: Trends of declining Global Inflation are observed, and Break Even Inflation rates are likely to lead inflation down.
- Earnings Season: Tyson, UPS, Alibaba, and Eli Lilly reported mixed results. Tyson and UPS faced challenges, Alibaba posted double-digit topline growth, and Eli Lilly soared to all-time highs.
- Closing Thoughts: A temporary resurgence in inflation may lead to one more hike by the Fed. The decision point for most developed markets is whether to pause or keep hiking.
Actionable Insights
- Investment Caution: The market is facing pressures from various economic factors, including inflation and global events. Investors should monitor economic data points and central bank decisions.
- Energy Sector Opportunity: Strikes in Australia could disrupt global LNG supply, creating potential investment opportunities in the energy sector.
- E-Commerce Growth: Alibaba’s e-commerce growth indicates a continued trend towards online shopping, providing potential growth opportunities in the e-commerce sector.
- Inflation Watch: The complex inflation scenario requires careful monitoring, as it may influence central bank decisions and impact investment strategies.
