090518 CGI Weekly Equities Strategy Update
Historically, the month of September has been the weakest month for US, EU and EM equity markets. During the month, analysts globally frequently review their estimates following release of Q2 results and lower their estimates for the remainder of the year, US equities, namely regarding US Dollar adjustments, as the past 5 months of USD strength affecting foreign earnings for US companies has not been assessed sufficiently by US equity analysts and strategists yet.
We see the complaisance for US equities and EPS too high, particularly as analysts and strategists continue to be “late-to-the-plate” on adjusting EPS for the latest swings in the USD. With the USD moving from 88 – 96 within just 5 months, now there is too little recognition by analysts and investors for that embedded USD strength weighing on Q3 and Q4 EPS, which we estimate need to be adjusted due to current USD temporary strength by at least -4 to -6 cents from current full year consensus of 154.
The USD continued to show short-term momentum signs of rolling over after entering its seasonal period of weakness at the beginning of July. The USD peaked in November 2016 and has consolidated since January 2018. We do not think that this proves to be the final trough for the USD since its 15-month bear market started. All long-term technical and fundamental indicators continue to point south, so we keep our bearish trend stance and maintain our low-price-target of 82 for the next 6 – 9 months for the USD.
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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