Author — Martin Young, CEO of Farringdon Asset Management

Global Macro Review

US Markets

• Fed Powell will give speech today, focusing on interest rate directions.
• In addition, non-farm payrolls figures will be announced on Friday.
• These events have spike volatility in the market.
• Farringdon expects that when either good or bad job figures are announced, it will lead markets to fall.
• Concerns on good job figures will lead to market expecting Fed to not cut rates quickly.
• On the other hand, concerns on bad job figures will lead to market expecting that a hard landing is more likely to happen.
• Historically, there were only 3 soft landing when interest rates are cut.
• It is healthy and normal for a market to go into recession at times like this.

Chinese Markets

• Chinese stocks rise on government stimulus.
• CSI 300 rose 9.1% on Monday, heading towards a technical bull market.
• Multiple measures have been announced including interest rate cut by 0.5%.
• Farringdon view is that this rise in the CSI 300 Index may be a dead cat bounce.
• Structural issues remain and the Chinese government is unlikely to be able to match stimulus like it did in 2008.
• Expectations of CSI index will peak at 4500 – 5000 levels.
• Advisors with clients in Chinese market should ride this wave up and plan an exit strategy.

Other Markets

• Saxo closes Hongkong and Shanghai office.
• Saxo will remain present and continue to focus its operation in Asia-Pacific Region, based in Singapore.

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The information contained in this document is for information only and should not be taken as a recommendation to buy or sell. Investors are reminded that past performance is no indication of future performance.