UBS On-Air: Market Moves

Anwiti Bahuguna serves as Chief Investment Officer of global asset allocation, and portfolio manager for Northern Trust Asset Management. Anwiti shares her views on the US economy, real estate, along with outcome implications of the US election to markets. Plus, we spend time highlighting where opportunities can be located. Host: Daniel Cassidy

After the excitement of yesterday’s GDP data, today investors are granted another peek into the hedonistic lifestyle of the US consumer. Personal income and consumption data are due, and both should be relatively buoyant. Job security and rising real incomes are powerful forces for supporting economic activity through consumer spending.

With Election Day just days away, Shane drops by to update on what swing state polling is pointing to, and how the Presidential candidates are spending their final days on the campaign trail. Plus, an update on developments as it relates to Israel and Iran. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

Dan Suzuki serves as the Deputy Chief Investment Officer for Richard Bernstein Advisors (RBA). Dan drops by the 1285 podcast studio in New York to share his US economic outlook, thoughts on Q3 corporate earnings, equity valuations, monetary policy, and more. Plus, we spend time highlighting where opportunities can be located. Host: Daniel Cassidy

Third quarter GDP data comes out of some European economies, and the US. The data will be wrong because (as recent US revisions so clearly demonstrated) economic statistics fail to capture the rapid pace of structural economic change. Comparing headline GDP in countries like Italy and Germany (declining populations) with countries like the US (rising population) is unfair.

Leslie stops by to explain the factors that are driving rate volatility, along with potential US election outcome implications for fixed income investors. We also cover a near-term outlook for fixed income markets, along with review positioning considerations within the asset class. Featured is Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office. Host: Daniel Cassidy

US job vacancy data is due. The survey response rate for this data is so low as to class those who do bother to respond as peculiar. Moreover, the data measures externally advertised vacancies only, and the surge and retreat in job vacancy numbers probably owe more to the changing ratio of internal to external job vacancies within companies.

With Election Day roughly a week away, combined with the upcoming October employment report, November FOMC meeting, and an abundance of Q3 corporate earnings ahead, investors will have a lot to digest over the next two weeks. Jason provides some thoughts on these factors, along with outlines CIO’s medium-term market outlook, and latest positioning guidance. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Japan’s governing coalition lost its majority in the Diet lower house. Prime Minister Ishida signaled that he does not intend to resign, but a third coalition partner must now be sought. This creates market uncertainty. If political bargaining drags on, the Bank of Japan might delay raising rates. Opinion polls underestimated support for the opposition—a reminder that investment decisions should not be based on opinion poll evidence, anywhere.

In this livestream, Global Head of Investment Communications Kiran Ganesh and colleagues discussed the implications for Fed easing and US equities, while evaluating risks from the upcoming US election, and looked at the scenarios for the months ahead.

US Michigan consumer sentiment is due, including the inflation expectations reading. Is this useful information? It is not. The data will be distorted by frequency bias (there is more to life than food and fuel for the family fleet of SUVs, but that is pretty much all US households focus on for inflation). Political bias will also distort the data—Republicans think they are living in Weimar Germany, Democrats think inflation is under control.

Patricia Zobel serves as Head of Macroeconomic Research and Market Strategy for Guggenheim Partners Investment Management, and previously served as an executive at the Federal Reserve Bank of New York (New York Fed). Patricia shares perspective on a range of topics, spanning an outlook for the US economy, to the direction of monetary policy. We also spend time on allocation preferences across fixed income, real estate, and ex-US. Host: Daniel Cassidy

Our conversation revisits the emerging markets as we explore opportunities across equities and bonds, along with touch on what investors should keep in mind as it relates to the upcoming US election. Plus, we take inventory of what was a busy month of September spanning monetary and fiscal policy developments out of the US and China. Featured is Xingchen Yu, Emerging Markets Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The authors of the latest Federal Reserve Beige Book are clearly followers of TikTok memes. The economy was described as being modest and demure (actually as growing at a “slight or modest pace” but it amounts to the same thing). The benign growth story fits with most economists’ central projections. On inflation, anecdotes suggested a more concerted resistance to profit-led inflation from consumers.

On this episode of Viewpoints, Burkhard weighs diverging viewpoints when it comes to the condition and health of the US economy, along with whether there is further room to run in equity markets in consideration of realized returns over the past couple of years. In doing so, Burkhard breaks down the anatomy of bull-and-bear markets.

ECB President Lagarde is set to speak again. It is very unlikely that the last 24 hours have changed the world view of the ECB president. The tone of yesterday’s remarks signaled the direction of travel for Euro area rates was clear, though there was an attempt to insert some ambiguity about the pace of easing.

We spotlight the latest edition of the quarterly UBS CEO Macro Briefing book as we explore how business owners and investors feel about the upcoming US election, the state of the US economy, the course ahead for Fed monetary policy, and more. Featured is Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Yesterday’s pontification of Federal Reserve speakers created a stir in bond markets. There were a range of views expressed, from “keep on cutting” to “more gradual cuts”. Markets, rendered skittish by Fed’s “data dependency” on undependable data, have raised yields. US inflation is down one percentage point since last December, which would justify a similar reduction in rates over the course of this year.

On this episode, Jason and Ron meet in-studio to discuss investment considerations and opportunities as it relates to potential outcome scenarios of the upcoming US election. They also spend time exchanging thoughts on the health of the US economy, the road ahead or monetary policy, and more. Featured is Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and Ron Temple, Chief Market Strategist with Lazard Asset Management. Host: Daniel Cassidy Recorded on Oct 17.

As talk of a “no landing” scenario for the US economy has reemerged, Jason weighs whether the US economy has already landed, though with a 5% nominal growth rate. We also discuss CIO’s recent upgrade of equities to “attractive” and outline additional asset class views per the latest UBS House View. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

German September producer prices are expected to stay in deflation (this is not a surprise, they have been in deflation for over a year). While other factors will add noise to consumer price data, producer prices are a better reflection of corporate pricing power. The deflation signals should secure expectations for further rate cuts from the ECB.

US data once again reminded investors of the wisdom of never underestimating the hedonism of the US consumer. September retail sales were strong (the data do include the effect of inflation). Consumers are often disbelieving of the data, but the value of US retail sales are up over 25% from the start of 2021 while goods inflation is up a little more than 17% over the same period. That suggests a rising living standard, at least when measured by material possessions.

As we look towards year-end, Frank Sileo drops by the studio to provide a performance update and outlook for the preferred securities sector. We also spend some time highlighting positioning considerations within preferreds. Featured is Frank Sileo, Senior Fixed Income Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The ECB meets. Final September Eurozone consumer price data should confirm that inflation has fallen almost nine percentage points from its peak, and a whole percentage point this year. Cutting rates is simply an act of chasing inflation lower and keeping real rates stable.

Hear from top portfolio managers and business heads from UBS Asset Management’s Muni, Taxable Fixed Income, and Liquidity teams. They share views on the markets and what they believe you should be focused on within the fixed income space.

Former US President Trump suggested tariffs of up to 2,000% on cars imported from Mexico (an unconventional interpretation of NAFTA). US and European investors have viewed proposed tariffs as a bargaining device, not to be taken seriously. The random suggestion of numbers like 2,000% does suggest more rhetoric than rigorous policy analysis. However, the repeated theme of trade taxes implies the policy is important.

Our conversation updates on relief and recovery efforts for hurricane-impacted states, recent developments surrounding growing tensions across the Middle East, and what key swing state polling is pointing to with Election Day just a few weeks away. Featured is Shane Lieberman, Senior Governmental Affairs Advisor, Governmental Affairs US. Host: Daniel Cassidy

UK labor market data are due. Employment is not a constraint on British consumers (and unemployment data come with quality health warnings). Average earnings will be a market focus, although if flexible working allows people to move into higher paid employment this raises average earnings without raising wages.

As we begin a new trading week, Jason takes inventory of potential sources for volatility in the coming weeks, as it relates to uncertainty surrounding economic data, Fed policy, the US election, Q3 corporate earnings, and policy developments out of China. Plus, a review of CIO’s current positioning recommendations. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s much anticipated economy ministry press conference over the weekend did not give much detail. There were hints, and suggestions, and promises, but few clear proposals. International investors are looking for fiscal support because if consumers are restricting spending out of concerns for the future, monetary policy easing is unlikely to offer much help.

As we conclude another trading week, Matt reflects on the latest round of inflation data, along with recaps the September FOMC meeting minutes. We also spend time addressing current equity market valuations, equity positioning views, along with the commencement of corporate earnings reporting. Featured is Matt Tormey, Equity Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

US September consumer price data signaled disinflationary trends. Food prices have disproportionate political importance, but around 40% of the monthly increase in food prices was due to eggs. Can an election be swayed by an egg? Some key states saw food prices fall compared to August. Voters remember price levels, and tend to have an idea of a “fair” price for food items that would have been fixed in their minds many months ago. The political impact of this price report is probably marginal.

US September consumer price inflation should show a slower rate of growth in the headline measure. Now that the Federal Reserve has finally started its easing cycle, this matters a little less to markets, but it is still important. Critically, middle-income inflation is running at about half the headline rate, and that gives the group an important degree of spending power.

On this episode, Jason and Ken meet in-studio to discuss investment considerations and opportunities across Artificial Intelligence, private markets, and real estate. They also spend time exchanging thoughts on the health of the US economy, the road ahead or monetary policy, and more. Featured is Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and Ken Caplan, Global Co-Chief Investment Officer with Blackstone. Host: Daniel Cassidy Recorded on Sep 26. Blackstone and portfolio company data discussed in this podcast (including portfolio revenue, default and other data) is as of Q2 2024, unless otherwise stated.

The minutes of the last Federal Reserve meeting are due, and should be fascinating. This meeting cut interest rates by 50bps, and had the first Fed governor dissenting in over two decades. Dissents may possibly be managed as part of the theater of the Fed—a single high profile dissent may mask wider disquiet at the scale of the rate cut. Certainly Fed Chair Powell’s dependence on dodgy data is looking a questionable strategy in the wake of recent (inevitable) data revisions.

October House View live conversation, featuring insights from Leslie Falconio, Head of Taxable Fixed Income Strategy, CIO Americas, and Paul Hsiao, Asset Allocation Strategist, CIO Americas. Recorded on Oct 3.

New York Federal Reserve President Williams—a genuine economist, who should thus be listened to —signaled that the Fed is happy with the state of the US economy and that two 25bp rate cuts this year would be appropriate. This clearer guidance for the future is a big improvement on Fed Chair Powell’s inept dependence on dodgy data.

On this week’s Snapshot, Jason reflects on the latest round of jobs data and weighs what a better-than-expected growth outlook means for the Fed’s monetary policy course into 2025. We also spend time outlining CIO’s current allocation views and guidance. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Shiavon Chatman

The US employment report last week was wrong, because the data always is. However, the general direction of US employment signals an economy very far from “recession”. However, voters do not think about abstract concepts like GDP, have a distorted view of price levels, and believe that pay increases are due to them working harder. While the reality is people have a higher standard of living for the same amount of work, the perception is people are working harder to stand still.

As we close out the trading week, Brian and Paul weigh in on the latest jobs data, and what it means for the health of the US economy, along with the course ahead for monetary policy. Plus, we review CIO’s current allocation recommendations, and preview what you can expect in the week ahead. Featured is Brian Rose, Senior Economist Americas, and Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

It is US employment report Friday, the monthly celebration of dubious quality data that always thrills markets. Looking at the broad picture of the US labor market, the position is what it has been all year. Firms are slower to hire, but not keen to fire. This gives job security, and supports consumer spending patterns.

On this episode of Viewpoints, Burkhard turns focus to the notable rally across Chinese markets in recent time, and speaks to how investors should interpret the move, along with shares investment lessons to consider.

The economic calendar is strewn with irrelevancies in the form of business sentiment opinion polls. For-profit polls crave the oxygen of publicity, but neither their profit motives nor the attendant media attention are guarantees that they reflect economic reality. Partisan bias, inaccurate answers to questions, and falling response rates are all challenges to the usefulness of surveys (of any kind).

Hear from Mark Haefele, GWM Chief Investment Officer, Kiran Ganesh, Global Head of Investment Communications, Jason Draho, Head of Asset Allocation for CIO Americas, and Carolina Corvalan, Fixed Income Strategist.

Markets have responded to escalating violence in the Middle East. Overnight missile attacks by Iran against Israel differed from those in April—there was less warning, and faster missiles were used. Israeli Prime Minister Netanyahu has pledged retaliation. Investors have seen this as a more serious escalation, and oil prices have risen. However, even at higher levels oil prices are still near the lows for the year. This limits the economic consequences for now.

With the Fed’s easing cycle underway, we examine how central banks across the EM landscape are moving toward accommodative policies, and the implications for investors. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The US vice-presidential debate is more political entertainment than market relevant. Investors are interested in policy details, and election probabilities. Policy details are unlikely (neither campaign wants to give their opponents ammunition). Vice-presidential debates rarely affect the main political race. The question is whether this debate generates the same level of TikTok content as the presidential debate.

As the third quarter concludes, we take stock of the US economy and financial markets heading into the fourth quarter, as well as other geopolitical matters, along with developments within China. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Politics can dominate headlines without creating meaningful consequence for financial markets. Escalating military action in the Middle East is an example. Investors are likely to focus on consequences for oil prices and safe-haven flows, which seem muted for now. The success of the far-right in Austria’s weekend elections may be a larger investor concern. The global trend toward prejudice politics risks disrupting global trade and capital flow in the near term, and undermining the benefits of technological change in the longer term.

Brad rejoins the podcast to discuss the investment thesis behind CIO’s most preferred view of the US financials sector. We cover a performance update, and outlook, along with a look at related investment themes, risk considerations, and sub-sector preferences. Featured is Brad Ball, Financials Analyst Americas, UBS Chief Investment Office. Host: Daniel Cassidy