Alpine Macro Research

Independent investment research.  Market insights & analysis.  Investment strategy & asset allocation recommendations.

Global Strategy

Mulling Over The Bear Market, Recession And Recovery  

March 30, 2020

However, it is still worth pointing out that both the speed and magnitude of stock price declines is only matched by the 1929 crash. In addition, most sentiment indicators suggest that investors have turned as bearish as they were during the 2008 Global Financial Crisis (GFC).

Global Strategy

Au Autopsy On U.S. Corporate Profitability

December 16, 2019

Such a sharp divergence between these two corporate profit series has rarely happened. The last time it occurred was in the second half of the 1990s, when NIPA profits fell between 1997 and 2001. However, S&P 500 EBIT behaved differently: It fell in 1997, followed by a two-year surge. It fell again in 2001 when recession hit.

Emerging Markets & China Strategy

China: At An Inflection Point?  

September 18, 2019

An inflection point may have been reached in two major themes affecting China-related assets this year, namely the U.S. –China trade war and Chinese policymakers’ reflation efforts. We now see higher-than-even odds that a “deal,” however structured and temporary, will be reached in next month’s negotiations, and that China’s policy easing will regain some momentum.

Emerging Markets & China Strategy

Korea: Following In Japan’s Footsteps 

April 16, 2019

Korea’s current macro conditions, characterized by a domestic savings glut, weakening productivity growth and a worsening demographic profile, share striking similarities with those in Japan some 20 years ago. The Korean economy is likely to follow Japan’s roadmap to drift towards even slower growth and price deflation, which calls for aggressive policy easing.

Emerging Markets & China Strategy

EM Equity Allocation For Q4 

October 3, 2018

Overall, the country allocation recommendations are largely stable, but the dispersion between countries’ model weights and their benchmark weights has become smaller, especially for our less favored markets. For Q4 no country fits our criteria for the most bearish rating of “underweight”, i.e. 20% below benchmark weight for smaller markets and 10% below for larger ones.

U.S. Themes & Strategy

The Case For A V-Shape – Mar 23, 2020 

March 23, 2020

The current episode rhymes with previous V-shape market trajectories in 1998, 2001 and 2008, even though the shock driving the panic is unique. The potential for a corporate credit event is high up on our list of tail risks to monitor, at least until the government offers open-ended protection to credit-starved corporations. Gold remains attractive while for oil and energy stocks it is still too soon to bottom-fish.

U.S. Themes & Strategy

Housing And The COVID-19 Shock: A Discussion With Joe Gyourko 

March 26, 2020

This report comes at a critical time for both the U.S. housing market and broader economy. Unlike 2008, the real estate is far from the epicentre of the meltdown. But it will be critical to consumer behaviour and the nature of the recovery.

Conditions are falling into place for a prolonged real estate expansion and outperformance of housing plays. Apartment REITs and distressed Houston assets are among the assets to consider.

U.S. Themes & Strategy

Bank Stocks And The V-Shape 

March 27, 2020

Bank stocks have performed like “2008 all over again” during the pandemic. Barring a nightmare scenario, we agree with Warren Buffett. Banks should be among the market leaders once the bottom is in place, given encouraging differences with the Global Financial Crisis.

Global Fixed Income & Currency Strategy

Towards A Brave New Fed  

February 28, 2020

The immediate focus of investors is clearly on the coronavirus and its negative impact on the global economy. The attention will gradually shift to the coming policy responses; first from China and then from the Fed. The Fed is already conducting a review of its monetary policy strategy. The coronavirus could hasten the shift to a new and more accommodative regime, such as average inflation targeting. What will this mean for global fixed income and currency markets?

Global Fixed Income & Currency Strategy

Fixed Income & FX Indicators 

March 6, 2020

The recent plunge in yields has worsened the risk profile of several bond markets, including U.S. Treasuries. Ultimately, we expect the Fed to cut rates close to zero, which will pull bond yields even lower. But for now, we recommend keeping duration near benchmark as our subjective outlook is tempered by our quantitative models.

Global Fixed Income & Currency Strategy

CLOs: A Replay Of The Subprime Debacle?  

December 6, 2019

There are increasing concerns over “systemic risk” that is associated with the proliferation of collateralized loan obligations (CLOs). Is the CLO market headed for a major debacle similar to the meltdown of the CDO market in 2008? How to assess and monitor the risk associated with CLOs and their underlying assets, leveraged loans? What should investors do with these debt instruments?