UBS On-Air: Market Moves

There is little macroeconomic data today. Asian markets have been moved by corporate news, with micro evidence of additional weakness from China’s consumers. At a time of structural change, the assumptions behind macroeconomic data can become further and further removed from reality. Corporate data should be more precise, but listed companies are relatively unimportant in most economies.

We weigh in on the state of the race and investment implications following the Democratic National Convention (DNC). Featured are Tom McLoughlin, Co-lead of ElectionWatch, CIO Americas, and Nadia Lovell, Senior US Equity Strategist, CIO Americas. Host: Anthony Pastore

The rise of economic nationalism has encouraged a rise in accusations of export “dumping” (selling at a loss in foreign markets)—and China has been specifically accused of this. China’s official industrial profit growth data, if accurate, argues against general export dumping. Profits growth accelerated in July, and with domestic demand lackluster some of this must be due to exports. Accelerating profit growth is not compatible with dumping.

As we begin a new trading week, investors do so with further clarity around the course for monetary policy, namely the prospects for rate cuts in the months ahead. Jason will spend some time reflecting on last week’s Jackson Hole Symposium, along with outline the updated allocation preferences per the latest UBS House View. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Bank of Japan Governor Ueda spoke to the Japanese Diet, and was inclined to be somewhat hawkish. There was an acknowledgement of the instability of financial markets, which is hardly surprising in the wake of recent volatility—including suggestions that BoJ action may have contributed to it. The yen strengthened modestly in the aftermath.

The Federal Reserve minutes make it clear that rate cuts are coming (some wanted to cut in July). The Fed is late, and is now going to have to scramble after the decline in inflation, in an undignified manner. Policy operates with a lag, so the economic benefit of these cuts will take some time to come through (policy lags are why “data dependency” is so dangerous). The Jackson Hole summer camp for central bankers gets underway, and between marshmallow roasting and campfire songs there is a chance for some interest economic papers.

The US will be revising last year’s non-farm payrolls data. Markets have a heightened interest in the labor market, and these revisions are likely to be negative. However, this does not change anything about the economy. Making payrolls marginally less inaccurate is about spin, not substance. Consumers have been spending this year based on the labor market they experience, not the labour market that was reported.

Tune in monthly to hear from top portfolio managers and business heads from UBS Asset Management’s Muni, Taxable Fixed Income and Liquidity teams. We hear candidly from them on their views on markets and what they believe you should be focused on within the fixed income space.

US politicians are politicking. At the margin, Vice President Harris’s endorsement of the proposed increase in US corporate tax rates might seem to be market relevant. However, listed companies are not always that sensitive to headline corporate tax rates. Otherwise, this is still mainly political theater (obviously, were Taylor Swift to do an impromptu concert in Chicago, the theater would become serious).

Jason explains why financial markets have become more prone to rollercoaster swings that result in positive momentum and sharp reversals. We also preview this week’s Jackson Hole Central Bank Symposium, and what markets will be looking for in Fed Chair Powell’s speech, along with review CIO’s current guidance when it comes to portfolio positioning. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The data calendar today is so quiet even ECB President Lagarde does not appear to be speaking. The lack of economic data to guide investors might be troubling—but recent market swings were not based on rational economic analysis.

We close out another trading week by recapping some notable economic data releases that could influence the Fed’s decision on rate cuts for the September FOMC meeting, and through year-end. We also preview what you can expect in the week ahead. Featured is Danny Kessler, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

The US middle-income consumer is doing just fine, with yesterday’s retail sales data showing little fear of unemployment and a willingness to indulge in the national pastime of spending money. Today’s Michigan consumer sentiment data will tell us about the extraordinary degree of US political partisanship, not about what consumers are feeling.

Tune in monthly to hear from UBS Asset Management’s multi-asset team for thoughts on the global macro environment, and markets.

US July consumer price inflation data continued recent trends. Most sectors of the US economy have deflation somewhere (furniture prices seem to be plunging in California. Clothing prices are falling in New York). Fictional prices for housing are propping up the inflation data—which means middle income homeowners have more spending power than consumer price numbers imply.

The publication of US consumer price inflation forces economists to become used car salespeople and real estate fantasists. Part of the disinflationary trends come from used cars (which most US households will not buy this year) and the fictional owners’ equivalent rent (which no one pays). Disinflation in these categories does not improve the spending power of most consumers.

US July producer price data are due. Producer prices better represent corporate pricing power than consumer prices. (Consumer prices are a combination of the pricing power of retailers, and the power of imagination in devising owners’ equivalent rent.) This means the real fed funds rate is around 3% for companies—an unnecessarily restrictive rate.

Jason explains last week’s market evolution, and what this week might deliver for the markets as we anticipate key economic readings on consumer spending trends and the inflationary environment. Jason also outlines CIO’s medium-term market outlook, and views when it comes to portfolio positioning. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

At the risk of tempting fate, financial markets seem to have got the past week’s hysteria out of their systems and are prepared to go back to looking to economists for guidance. Unfortunately, there is relatively little economic news today—although inflation data is likely to be significant this week.

As we close out another trading week, Matt recaps the drivers behind the volatile swings within US equity markets over the past four sessions, along with updates on the Q2 corporate earnings season. Plus, we preview what you can expect in the week ahead. Featured is Matt Tormey, Equity Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

China’s July consumer price inflation rose a little more than expected, but this was not a signal of better demand. Excluding food prices inflation moderated, suggesting broader demand remains anemic. Food price inflation was supported by supply constraints for fresh vegetables and pork, and this sort of inflation signals potential damage to consumer spending rather than being a response to better demand.

Following a period of volatility across Asian equity markets, notably Japan, and within the technology sector, Xingchen stops by the studio to explain the drivers, share an outlook, along with guidance when it comes to positioning within the region. Featured is Xingchen Yu, Emerging Markets Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

In the wake of the recent episode of global market volatility, Jeffrey rejoins Jason on the podcast to exchange views on the volatility drivers, an outlook for the markets, the health of the US economy, and the direction of monetary policy. Plus, we spend time sharing thoughts when it comes to portfolio positioning. Featured is Jason Draho, Head of Asset Allocation Americas with the UBS Chief Investment Office, and Jeffrey Sherman, Deputy Chief Investment Officer, and Portfolio Manager with DoubleLine Capital. Host: Daniel Cassidy

There is an eerie calm over the economic calendar. Weekly US initial jobless claims data may get more attention than normal. This is not survey evidence (people have to do something to make a claim), but it is also not comprehensive as unemployed new entrants to the workforce are not captured. The state breakdown may offer some helpful insights into the effects of Hurricane Beryl on Texas (and through that, national employment data).

Our conversation outlines the current landscape for fixed income investors and where to locate opportunity within the asset class. We also discuss the road ahead for monetary policy, the economy and the broader markets. Featured are Leslie Falconio, Head of Taxable Fixed Income Strategy Americas, UBS Chief Investment Office, and Alex Obaza, Portfolio Manager, T.Rowe Price. Host: Daniel Cassidy

Bank of Japan Governor Uchida indicated that there would be a pause in interest rate hikes in the wake of the strong financial market reactions. Central banks are not supposed to create disorderly markets, so this is not necessarily surprising (the last rate hike will not be reversed). The political pressure on the BoJ to raise rates was not properly backed by economic fundamentals—there is a lesson there for all central banks.

Following a tumultuous start to the week for US equity markets, Jason stops by the studio to reflect on today’s rebound rally and what the days and weeks ahead might have in store for investors. Plus, considerations when it comes to portfolio positioning. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Solita Marcelli, Chief Investment Officer, CIO Americas, hosts Jason Draho, Head of Asset Allocation, David Lefkowitz, Head of Equities, and Leslie Falconio, Head of Taxable Fixed Income Strategy to discuss the market selloff, our outlook going forward, and how to position.

The Japanese equity market is behaving with all the decorum and rationality of someone dancing the Hokey Cokey at a family wedding at two in the morning. Economic fundamentals are not driving equity prices—no economic data justified yesterday’s 12% plunge, nor today’s 10% rally.

As volatility across asset classes continues, Jason breaks down the drivers behind the market moves, explains CIO’s current investment outlook, and shares guidance for positioning during these volatile conditions. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The Federal Reserve has been late in cutting rates, but that has been true for some time. The policy error is making things worse for lower income households. Middle income households are the critical group for economic activity, and are less negatively affected by the delay in rate cuts. Last Friday’s employment report (seemingly weather impacted) does not change that; indeed, unemployment for college graduates declined.

As we close out another trading week, Brian shares his thoughts on the latest jobs report, along with the health of the US labor market. We also spend time reflecting on this week’s FOMC meeting, and what the outcome suggests about prospects for a rate cut at the upcoming September meeting. Plus, we preview what you can expect in the week ahead. Featured is Brian Rose, Senior Economist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

On this week’s episode we examine President Biden’s proposed reforms from the US Supreme Court, along with an initiative from the White House the curb the flow of fentanyl into the US. We also spend time on the regional implications of recent escalations related to the Israel-Hamas War. Featured is Shane Lieberman, Senior Governmental Affairs Advisors, Governmental Affairs US. Host: Daniel Cassidy

The US employment report for July is due. Like Orwellian newspeak, this can often mean the reverse of what it says it means. The household and establishment surveys portray contrasting pictures of employment (and both have shocking response rates). Immigration, self-employment, automation, and switching to higher quality jobs all play a role in messing with the data.

The Bank of England’s rate decision is due. Unlike some other central banks, the BoE has a tradition of dissent and disagreement. Arguably this produces better quality decisions (that is only true if the BoE agrees with my view and cuts rates). Disinflation forces argue that the bank should lower rates to prevent unnecessary real policy tightening, which would be a relief for the minority of households with a mortgage.

Join Jason Draho, Head of Asset Allocation Americas, and Brian Rose, Senior Economist Americas, for thoughts and reflections on the outcome of the July FOMC meeting. Jason also speaks to the market response, and shares CIO’s positioning recommendations. Host: Daniel Cassidy

We outline considerations when it comes to how to address company stock within a financial plan, including a review of risks, and guidance on how to navigate behavioral bias. Featured are Ainsley Carbone, Retirement Strategist, Justin Waring, Senior Total Wealth Strategist, and Katie Williams, Discovery Strategist, UBS Chief Investment Office.

Solita Marcelli is first joined by John Savercool, Head of the US Office of Public Policy, to discuss President Biden’s decision to drop out, and the impact on the race and investments.

The Federal Reserve is not expected to end its policy error today, but hopefully a rate cut will be signaled for September. Monetary policy has progressively tightened since the start of last year. For savers, slowing price inflation has increased real interest rates. For borrowers, slowing household income growth has increased real interest rates. The pressure of real policy has become ever more onerous as the economy has slowed.

We spotlight the latest edition of the quarterly UBS CEO Macro Briefing book as we explore how a shifting macro environment and unprecedented election cycle has impacted the outlook for business owners. Featured are Jason Draho, Head of Asset Allocation Americas, and Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

This month’s episode focuses on the reasons for and benefits of investing in people, along with the opportunities and challenges that exist within this ever-evolving landscape. Featured are Amantia Muhedini, Sustainable & Impact Investing Strategist Americas with the UBS Chief Investment Office, and Jennifer Anderson, Head of ESG with Lazard Asset Management. Host: Daniel Cassidy

Germany and Spain offer July inflation data. German data is expected to be stable. That puts it within a reasonable range around the ECB’s 2% target. Spanish data is expected to slow, though somewhat further away from the target level. However, the extent of disinflation recently is truly remarkable—German inflation has fallen over nine percentage points in less than two years, and Spanish inflation has fallen over seven percentage points.

Jason explains the factors that have been behind the notable market rotations over the past month, and for how much longer these moves may continue. We also preview a busy week ahead of Q2 earnings reports and macro data, including the July Jobs Report. Plus, provide thoughts around portfolio positioning. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Markets care about politics when policy probabilities change. So far, the US political circus has not changed many probabilities. The polling position of US Vice-President Harris has improved, but sentiment surveys (as low quality indicators of markets) are not significantly shifting probabilities. The prospect of an announcement about the Democrats’ vice-presidential nominee might matter. Vice-presidential nominees rarely change things much, but they can hint at policy direction—which investors care about.

As we close out another trading week, Danny Kessler drops by to reflect on this week’s abundance of Q2 corporate earnings results, notable economic data releases, plus previews what to expect in the week ahead. Featured is Danny Kessler, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

Yesterday’s second quarter US GDP release showed the US consumer is alive and well, and spending money. Some of the GDP data reflected a bounce back from the first quarter. Today’s personal income, consumption, and deflator data offers more insight into the direction of travel. It would be unwise to bet against reasonable US consumption, with middle-income households still relatively well supported.

In the wake of Sunday’s announcement from President Biden, Shane outlines what comes next for the Democratic Party and the 2024 election cycle, including what the ticket could look like in the weeks ahead, and the role President Biden will play on the campaign trail. We also examine how the GOP has been responding to the events of the past week, and recap Monday’s Congressional testimony involving former US Secret Service Director Kimberly Cheatle. Featured is Shane Lieberman, Senior Governmental Affairs Advisors, Governmental Affairs US. Host: Daniel Cassidy

Jason Thomas rejoins Jason Draho for a discussion around the US macroeconomic environment, including an outlook for growth, inflation and Fed rate cuts. We also spend time outlining portfolio positioning preferences. Featured are Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office, and Jason Thomas, Head of Global Research & Investment Strategy at The Carlyle Group. Host: Daniel Cassidy

Equity markets exhibited some volatility yesterday. This is not the fault of economists (there was no news of any economic note). The nature of the moves are unlikely to offer any economic signals either.

The US Dollar has been the undisputed global reserve currency for decades, though can this standing sustain? Alejo joins to weigh in on this pressing question, along with shares thoughts on alternative currencies and commodities that can thrive in a more diversified global currency environment. Featured is Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas, UBS Chief Investment Office. Host: Daniel Cassidy