Dan | Income, Investing & Planning

In a year when the US economy exceeded almost everybody’s expectations, the underlying federal deficit roughly doubled, spotlighting a dire fiscal trajectory likely to only worsen. Measured as a share of GDP, the adjusted widening in the deficit marks one of the three worst years since 1950. A major driver of US equities in past decade is fading fast as corporate America’s spending on share buyback is slowing in the face of higher for longer rates and uncertain economic outlook as currently, the US earning yield is much lower as compared to credit yield. Russia’s seaborne crude exports rise to a four-month high with about 3.53 million barrels a day of crude was shipped in the week of oct 22, upped by 20,000 barrels a day a week earlier. This came despite the earlier statement that Moscow would prolong export restriction at a reduced level until the end of this year. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Singapore centralizes gas purchase to boost energy security as the nation will aggregate demand from generating companies to create economies of scale for greater bargaining power in hopes that the potential cost savings can be passed down to consumers eventually. Ten year treasury yield tops 5% for first time since 2007 as the federal reserve reiterated their stance on hiking again if a resilient economy fans inflation risk. In addition to that, a higher cost of borrowing is priced in view of the sustainability of the governments burgeoning budget deficits. China plans twice a decade financial policy conference next week to prevent risk and set medium term priorities for the $61 trillion industry. The meeting will provide more clarity on how the government intends to turn around their economy without stoking unintended risk. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Stock pickers are sidelined with world events overshadowing earnings as investors appeared to be more sensitive to global political headwinds as opposed to fundamentals. Such a concerted movement is not quite typical for earning season which signalled that macro is dominating the narrative again. China’s property woes pour cold water over steps to boost stocks as foreigners continued to sell off in droves after being constantly blasted with pessimistic global headlines. Despite the recent positive data, investors continued to be focused on the negatives at the moment as they remained cautious. Europe biggest money managers bet ECB rates haven’t hit a peak citing the region’s vulnerability to oil price shocks especially given the recent geopolitical crisis. That said, policy makers will have to thread carefully as unlike US, some of the country’s fundamentals are not as solid. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Xi’s $1 Trillion “Project of the Century” gets a reality checks as overall activity in the BRI countries is down about 40% from its 2018 peak as China’s economy slows. At the moment, Beijing has less capital to lend and pressure is growing to recoup the outstanding money it loaned. Xi’s crackdown on Finance hits two-year mark with no let up as seen from recent detentions and arrest of star investors and top executives. This echoed the party’s stance earlier this March that the crackdown is far from over as a result of moral decay driven by greed. Wall street strategists sound alarm on dimmer profit outlook as the reporting season kicks off with more number of stocks seeing an earning downgrade than upgrades. The narrative surrounding this pessimism is largely attributed to the expectation of higher for longer rate environment. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Turbulent bond market offers a fleeting glimpse of cycle’s end as the recent rise in long term yield had resulted in a less inverted treasury yield curve. That said, consumer price growth had failed to moderate as much as estimates which increases the odds for another rate hike later this year. China’s economy is in search for a more stable footing as the recent green shoots have been offset by lingering fears around the property crisis and a stubborn inability to revive confidence. More data is needed to determine if the stabilizing sign is sustainable or short lived. End of corporate America’s profit recession comes with concerns as the recovery is still fragile given global headwinds and lack the breadth. A key determinant of whether the earnings recovery can last is the US consumer which as of now consumer spending continued to rise by 0.1% in Aug. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

US inflation is higher than expected in September which raises the prospect of another rate hike following a similarly robust recent job markets data. That said many investors had been willing to look past a recent rebound in headline inflation given that it was driven by higher energy prices. China newest move to support stocks seen limited in impact as the CSI300 index has been rather immune to support measures. For prices to reverse to an upward trend, it will require a combination of supportive policies, upbeat growth and geopolitical stabilization. UAE Defense firms weigh multibillion dollar Turkey deals as Abu Dhabi seeks collaboration in autonomous and electronic warfare systems as well as smart weapons. Turkey came in as one of the potential partners given the combat proven records of their drones. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

China budget revision would mark a “sea change” in fiscal strategy as the policy makers are entertaining the idea of pushing budget deficit to well above 3% cap set in March in view of supporting its economic growth in 2024 given what has transpired thus far in 2023. China sovereign wealth funds buys share in big four banks and had voiced its plans to continue their purchase to boost the stocks. The move came after being pressured by multiple stakeholders to set up a stabilization fund to buy stocks of which the authorities had refrained previously. US Mortgage rate climbs to fresh multi-decade high of 7.67% as mortgage rates moved up with the recent increase in 10-year treasury yield. With rates being at such a high level, home owners are reluctant to move having locked in a lower borrowing cost in the past. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

IMF Warns of stubborn inflation and weaker global growth in 2024 as it boosted its projection for the pace of consumer price increases across the world to 5.8% for next year. As a result, the IMF expects rates to stay higher for longer which will result in lower global growth for 2024. Fed officials head toward another pause as bond yield surge with the market now doing all the dirty work for the federal reserve. At the moment, policy makers are not ready to put an official pin on the tightening cycle just yet and is leaning towards a more wait and see approach. Oil holds onto Israel war surge as middle east risk flares and an increasing worry by market participant of further potential threats in the middle east region which accounts for a third of global supply. That said, much of the price volatility is due to expectations as no direct impact on supply demand has been materialized at the moment. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Dollar gains as traders seek havens after Hamas attack on Israel. This had further strengthened the bullish narrative which will be rough for the emerging markets and beneficial to the US markets. That said, analyst are seeing a reasonable chance for the rally to fizzle out relatively quickly. Gold gains as Attack on Israel bolsters metal’s haven status. The precious metal gained as much as 1.2% on Monday as financial markets braced for headwinds and volatility. The price movement came despite a positive US employment data which had bolstered the probability for another rate hike. Israel conflict enters third day with over 1,100 dead. The US has decided to send carrier group and weapons to the region and had criticized China for not showing Israel enough support. The criticism came right before the meeting between president Xi and US senators. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Stock sinks across mideast as Isreal goes to war with Hamas which is the deadliest attack on Israel in decades and threaten to escalate into a broader conflict. Should the fighting spread, Israel’s economy will likely be hurt by a drop in private consumption and in private and public investment. Oil traders are now focused on Iran as Israel war rages on in fear of a spill over scenario. At the moment, crude traders don’t expect a massive price surge as there’s no immediate threat to supply but the threat has escalated just as global crude supplies have been depleted by months of sharp production cutbacks by Saudi Arabia and Russia. China markets face choppy return from holidays against an uncertain global market backdrop which may temper optimism from spending boom at home. At the moment, there are hopes that the upcoming third plenum of the 20th Party Congress, a gathering of top leaders to discuss major economic and reform issues, will offer hints of further stimulus. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Fed’s bid to avoid recessions is tested by yields reaching near 20 year high as the long term real yields have soared with increasing expectation of a hard landing. Thus far, the fed leadership has not shown much inclination to resist the rise in long term rates. The German property crisis is claiming its first big victims with one of the developers filing for insolvency proceedings with around $4billion of projects under construction. Apart from Germany, developers around the world are also facing similar woes of surging cost and falling demand. Oil slump deepens below $85 with demand under the microscope as concerns over a slowdown in global growth are rising sharply. The price tanked despite the announcement by major producer on their intention of maintaining their voluntary production cuts through the end of the year. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Investors eye profit rebound after yearlong earnings recession as the S&P earnings are set to bounce back in Q4 which would serve as a lifeline for investors unsettled by a two month sell off. That said, there is still a plethora of reasons for investors to remain cautious of the outlook. Bond selloff upends markets as long-term borrowing cost surge and investors demand a higher compensation given the uncertain outlook. Thus far, the volatility has also spilled over to the stock market and affected corporate notes. Early estimates suggest that Japan didn’t intervene in the foreign exchange markets to prop up the market despite a sudden surge in Yen. A plausible explanation for the sharp surge may be a combination of a jittery markets and trading algorithms responding to the yen slide through key support levels. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Key Taiwan tech firms are helping Huawei with China chip plants which is raising the risk of triggering a backlash during their polls next January. As usual, the narrative by the west has been largely negative despite being unclear if the commercial relationship between Taiwan and China is against American sanctions. Global funds slash China stock positioning to lowest since 2020 as net outflows continued at the back of investor’s redemption and fund rebalancing. This came despite positive signs that the economy is stabilizing as investors felt that the recovery thus far has been inadequate. Thai central bank vows to curb Baht volatility as PM sees gain in having a weaker and more stable currency for their export and tourism. As a result, the central bank is expected to step in only if volatility fluctuates abnormally but will not step in to prevent further weakening of the Thai Baht. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Singapore home prices resume rising in sign of lasting boom with private home valuation rising by 0.5% from Q3, reversing the 0.2% decline in Q2. This came despite a seven-month low in home sales volume due to slowing demand amid a dip in major project launches. Higher rates are starting to hit US Profits as S&P 500 profitability falls from their peak and general consensus is that it may decline further as rates remained higher for longer. Against this backdrop, analyst are now promoting stocks with low borrowing in hopes that their earnings maintain resilient. BOJ intervention is key to stopping painful treasury sell offs as speculation that the BOJ will turn hawkish had added to the pressure on global bond markets. Thus far, the BOJ had announced an extra bond-buying plan for this week as 10 year yield hit the highest since 2013. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Congress averts US Government shutdown hours before deadline with a bipartisan victory that is de-voided of any spending cuts or billions in aid for Ukraine. That said, the exclusion for Ukraine aid seems to be only temporary to ensure that the government doesn’t shut down. Fed and ECB tread hopefully into final stretch of 2023 as key gauge of headline inflation slows more than anticipated which builds a case to refrain from a November rate hike. Elsewhere, several central bank decisions are due around the world with rates likely to be unchanged. Once unthinkable bond yields are now the new normal for the market as yields have surged to highest level in years and markets are normalizing with the era of easy money being over. Rates are expected to remain higher for longer as markets are still expecting inflation to stick above 2% targets. 👀 Prefer watching instead of reading? You can catch the video format on Instagram, YouTube & TikTok

Here's my own independent analyst report for Paragon REIT! In the report itself, you will find 1) My views on the REIT 2) Insights from their Financial Statements 3) Valuation models More to come moving into Q4 2023!