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JM investor
joined discussion11/25 01:10

Current macro-analysis for the market. Is the worst over?????

Hello all, have been a while I posted here. I admitted I lost focus last 3 weeks as I had been focusing on Malaysian elections.
Current macro-analysis for the market. Is the worst over?????
But in fact, while it “seems” the market is doing good. Let us check the current macro first,
Regarding to the macro, inflation is still the current main focus. Just a quick recap on why inflation is important to the market movement: Inflation is out of control, FED will be still raising interest rate, and more liquidity in the market drying out, market is still sluggish. However, note that stock market is a “leading indicator”. We MUST never wait until the CPI or inflation is at the peak or start slowing down, then only enter the stock. Economy indicator is always lagging! What we can do is to anticipate the “trend” based on the data on hand.
Current macro-analysis for the market. Is the worst over?????
First look on the United states Inflation rate. In my posts a few months ago, while the crude oil price was forming a state four pattern, i already mentioned the inflation because of the oil would be start going down. If we look on the inflation chart, do you notice that it was topping around Jun then started to decline after that. However, I did make some wrong anticipations as I though the CPI data would favour the stock market in August and September, but it never happened as the inflation is still more than the consensus value. Only until October, the inflation data is finally below the expectation and the market surged.
Next, what we need to anticipate is the FED direction. Will it still continue to keep on aggressive rate hike? Will it start to slow down? So, please mark the following important dates: CPI data on 13Dec and FOMC statement and rate on 15Dec. If the CPI data continues to show a declining inflation, I would say FED will also be slowing down the tightening policy.
Current macro-analysis for the market. Is the worst over?????
And yes, the rate hike will still continue, with lesser extent, probably from 0.75 to 0.5. If we based on the theory, rate hike= tightening monetary policy= stock continues to be sluggish.
In fact, as mentioned previously, stock is a LEADIND indicator. The moment sentiment changes, the stock will react first. It will move by anticipating the monetary policy is less tightening or even start to be loosening. It will start to fly!
Thus, what is important is to identify the potential leader that will be start running ahead. I will share at the later part.
Next, inflation caused by China zero-covid policy. It is apparently that China is now starting to loosen its covid-19 control policy. This is one of the turning points that I am looking at as well, which suggesting that we shall continue to see the lower inflation rate.
Current macro-analysis for the market. Is the worst over?????
Last is the most difficult to solve- Ukraine Russia war. I am not going into the details and the policies too much, but at least we still can see some efforts from the global to help Ukraine to export its crops. However, seriously Putin and Russia government is totally unpredictable. While Russia is losing, but the war may still drag for at least 1-2 years. What Russia will be doing in between, I would say, only Putin knows. But I believe that the worst is already over, as I think Russia will not be able to advance more.
In my next post, I will be sharing the current market analysis using stage analysis. You may be surprising which index is the one leading the market.
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  • SpyderCall : When Anwar was elected the Malaysian stock market had one of its best bullish days. The last time there was a 1 day rally this strong was after the Malaysian market crashed due to the pandemic.
    The market rallied because Anwar was elected, correct?

  • MonkeyGee : we will get the same pop when Trumps get reelected in 2024

  • SpyderCall : I assume you know a lot more about Malaysian politics than myself since you followed the election. So I wanted to ask you if Anwar is friendly with U.S., Europe, and other western nations? Or is he only friendly with eastern nations like China, Russia, etc.?
    I am just curious. This would be good information to know.

  • JM investorOP SpyderCall: yes, as it removed the uncertainty as a hung parliament

  • JM investorOP MonkeyGee: do you think he will be reelected? it would be interesting

  • JM investorOP SpyderCall: i was born in Malaysia thus I followed the Malaysian politics closely.
    From the parties that support him, the new government will be friendly to western union.

  • SpyderCall MonkeyGee: i hope so

  • SpyderCall JM investorOP: that should be good for Malaysian and US equity markets i believe

  • bullrider_21 : Dow Jones Industrial Average is the best performing index. Am I right?

  • bullrider_21 SpyderCall: Anwar's election removes the uncertainty which is good for the Malaysian mkt. He is seen as a reformer more friendly towards Western countries.

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