051418 CGI Weekly Global Equities Strategy Update
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After the global economy had been slightly losing momentum in Q1, Q2 so far is off on a tear. Although monetary policy around the world is no longer getting easier, and with the US leading the world to higher interest rates, lower real wage growth and uncertainty stemming from a potential trade war and the geopolitical situation are the primary reasons behind the slowdown. Commodities’ prices (input prices) are on the rise, and we are forecasting besides Oil, that other commodities’ prices will continue to rise throughout the summer of 2018, agri’s & other softs and metals are all gaining price momentum. After last week’s solid rally for WTI and Brent, we believe that given the global macro growth picture in Q2 gathering momentum, plus the geo-political risks rising, be it with Middle East tensions rising, and talks intensifying regarding Iran sanctions and Syrian we are expecting for attention to swing back to simple fundamentals of supply and demand.
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OPEC tightening, fresh sanctions on Iran and ongoing issues in Venezuela are meaning that supply has been reduced, whilst the strengthening global economy means that demand is now much strong
Additionally, we see the US Dollar in correction mode, after hitting a 4-month during the previous week. The USD was looking tired by the end of the week, and actually finished the week flat versus most of its peers, mainly due to soft CPI data and Fed Chair Powell sticking to the script sending the USD into correction mode, which we see extending into the new week.
Although we are expecting for weak EU and Japanese GDP and CPI data this week, we think those are currently priced in for the EURUSD, and we are expecting for USD to fall back over the next 1 - 4 weeks towards EURUSD 1.23.
US 10-year treasury yields found support Thursday and Friday at the top of a completed bullish falling flag, with a 1.7% upside penetration. We think for the coming weeks, yields for the 10-Year are capped at the flag's implied target of 3.14%, the highest level since mid-2011, implying a much faster pace of tightening, how might that affect equities?
Creative Global Investments LLC (CGI) is a Multi asset Investment Strategy & Investment Research firm. Our focus is on providing a multi asset investment strategy research based on a proprietary dynamic research process.
It identifies major themes with implications for the global financial markets and provides projections of aggregate corporate profits, valuation, profit margin, size and style trends, and long-term targets of the major equity indices. We apply fundamental, empirical, and technical research to complement its thematic and macro-driven approach. Additionally, an analytical and quantitative approach to provide a macro-economic framework, and create forecasts and projections of economic growth, inflation, and short and long-term interest rates.
We identify the sectors and industry groups most impacted by future legislative and regulatory actions, within the context of the dynamic political environment. CGI offers insights on the changing policy landscape and the risks and opportunities, utilizing contacts within the public and private sectors to provide information, to identify investment opportunity.
We have developed and fine-tuned a dynamic 6-step combination investment strategy and research methodology and process, which is integral to all Creative Global Investments LLC client research by order of priority:
- Global Macro Analysis Overlay
- Chart Technical Analysis
- Seasonality Analysis
- Fundamental Analysis
- Investor Behavioral Analytics
- Geo-political risk assessment
We can also provide customized and specific research solutions and special projects, besides capital market and corporate advisory services for private equity firms.
Our research product and regular periodic publications for various asset classes include annual and quarterly Investment Outlook & Strategy reports, weekly Strategy reports per asset class, thematic reports, sentiment indicator, which helps in analyzing the trajectory of market, sector and industry group trends. CGI caters to global institutional fixed income and equity clients.
CGI LLC was founded in 2002, and is based in New York, New York, with additional offices in Luxemburg and Croatia.
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