US: An emboldened bull, dancing on the edge

RW Advisory

Despite US equities reaching record highs, surface strength masks underlying fragility. The market is pressured by a revival of triple whammy headwinds: momentum exhaustion, inter-market divergences, and macro-cycle pressures. Rising tail risks—such as escalating geopolitical tensions (e.g., a fragile Iran-Israel ceasefire) and potential US trade policy shifts (including 70% tariffs)—threaten to disrupt momentum and increase volatility. RW Advisory warns that timing models and liquidity indicators suggest a possible Q3 inflection point. Investors are urged to prepare by rebalancing toward higher-quality assets, increasing cash allocations, and utilizing tactical hedges. Defensive positioning now may help mitigate potential turbulence expected later in the year.

- 11 July, 2025

US: Wild moves say more about the markets than the data

Minack Advisors

According to Gerard Minack, the reaction to two weak US data prints – manufacturing ISM and non-farm payrolls – says more about market positioning than the economic outlook. Yes, growth is slowing, but there are few signs of recession. The problem is investors had priced a feather-soft economic landing and shrunk risk premia in equity and credit markets. Moreover, the astounding move in dollar-yen hints that a number of inter-connected flows are reversing. This could be a bumpy, soft landing for risk assets. Suddenly, recession fears are back. Most – 75% – Fed tightening cycles end in recession. But Gerard continues to think that a soft landing is more likely than not for three reasons. First, there are no major financial imbalances. Second, the volatile goods sectors – inventories, autos and housing – have been through a cycle. Third, fiscal policy and AI-related investment are likely to remain supportive.

- 09 August, 2024

EM Digital Banks

Financials

Galliano's Financials Research

Victor Galliano turns bullish on KakaoBank, for its increasingly secure competitive positioning in Korea, its attractive digital efficiency ratio, its low customer acquisition cost and for its high activity rate. He switches his Buy rating from Banco Pan to Inter as the latter has improved operationally, it is sound on capital and attractive on valuations. While Nubank is executing well, Victor remains cautious on the stock as he continues to see potential capital constraints as a key risk, along with its stretched valuations.

- 31 May, 2024

Yes Bank (YES IN) India

Financials

Hemindra Hazari

While the market and the media’s attention are focused on the purging of toxic assets, a very different and critical asset continues to silently exit via the back door - Hemindra Hazari reveals that since April last year, 21 senior executives have quit Yes Bank (18 in FY22 and 3 so far in FY23) and this follows 19 departures in FY21. The high attrition would have been acceptable in FY21 (the first year of the reconstruction) the fact that it continues is indicative of major inter-personnel issues involving executives in the highest echelons. A lack of transparency to stakeholders re. these managerial exits is also a concern.

- 24 June, 2022

Cote d’Ivoire: Achi out

Signal Risk

Prime Minister Achi tendered his resignation on April 13th to President Ouattara, a largely procedural decision so as to enact a long-touted cabinet reshuffle that will culminate in the PM’s re-appointment. The move could potentially improve government efficiency and address intra- and inter-party dynamics, although no shift in state policy orientation is anticipated in the near-to-medium term. As part of his aim to achieve middle-income status by 2030, President Ouattara is aiming for private-led, broad-based and inclusive growth and hopes for 7.25% annual GDP growth and US$100bn in general direct investment.

- 14 April, 2022

What to do with Covid debt?

Eurointelligence

The Draghi / Macron agenda for Euro area fiscal reform potentially includes ambitious proposals for a European debt agency that would buy Covid-related debt from the ECB. The German government is open to some stability pact reforms, but Eurointelligence can't see it accepting the idea of a permanent debt transfer for political and legal reasons. They argue that the EU can pursue a fiscal union, or inter-government debt alleviation, but not both.

- 07 January, 2022

Banco Inter (BIDI11 BZ)

Financials

Galliano's Financials Research

StoneCo to invest up to BRL2.5bn in Banco Inter - while the deal has initially been well received by the market, it does not change Victor Galliano’s view that both Banco Inter and StoneCo face major challenges in justifying their premium valuations (Banco Inter trades at a 45% premium to its core competitor Nubank) especially at a time when competition across the board in digital financial services in Brazil is only intensifying.

- 28 May, 2021

LatAm Financials: Focus on the value opportunities

Financials

Galliano's Financials Research

Victor Galliano identifies the most attractive stocks based on value and GARP metrics. In Brazil, he highlights Banco do Brasil and Bradesco, but has recently turned cautious on Banco Inter. He continues to see further upside in Banorte (Mexico). Credicorp (Peru) is one to watch closely - most attractive PEG ratio among LatAm banks; plus investors have begun to cover short positions. Amongst the payment companies, Victor sees strong growth potential at PagSeguro. Within the wealth management sector he remains cautious re. XP's prospects due to eroding take rate and rising IFA costs.

- 14 May, 2021