The article continues below the ad
– Bad figures have been good news as long as they are not bad enough to indicate that we are in the middle of a recession. Recession fears have been in a decreasing trend, says Olav Chen, head of allocation and global interest rates at Storebrand.
Along with the rest of the market, he has seen the week’s buffet of US macro figures come in mostly weaker than expected. The stock market has appreciated that. This was the best week for the S&P 500 since June.
Chen is responsible for NOK 300 billion in customer funds. In tactical allocation – a discipline within management – timing is everything, he says.
– We have retained a marginal overweight in shares, but we still see that we are in the late-cyclical phase. This means that we are a little skeptical, also about the pricing in some markets. What has driven much of the market rise are seven stocks around KI and tek. If you take away the seven, there has been almost no rise in the market. It’s not really a good sign, says the manager.
Not superbull
For over a year, certain market players have been talking about an upcoming recession in the US economy. At the moment, the market is pricing in a 60 percent probability of recession in the next 12 months. But at the moment the soft landing narrative prevails, according to Chen, who says the question then is whether by soft landing you mean no landing or that you instead extend the economic cycle.
The article continues below the ad
– I am in the last camp. The economy has reached its ceiling no matter how you twist it. It’s a “waiting game”, he says.
– What exactly are you waiting for?
– A catalyst that can trigger a negative spiral that can trigger companies to start downsizing. A business cycle does not die of age, says the Storebrand manager.
Although they are slightly overweight in stocks, Chen sees the market as being in the upper part of the range in which it should be.
– We are not super bulls, but we clearly see in the super short term that there are arguments that allow the cycle to be extended somewhat, he says.
The market is now pricing in around a 40 percent probability that the US central bank (Fed) will raise interest rates this year. At the start of the week, around 70 percent probability was priced in. The markets are now also betting that the Fed will cut interest rates again during the first half of the year. Chen doesn’t.
– If things stay good going forward, you can just forget that the Fed is going to cut interest rates. I don’t think they cut in the first half of the year. I believe in “higher for longer”, but if you get a recession, “all bets are off”, he says.
The article continues below the ad
– It smells like an interest rate break
Throughout the week, investors have been fed key financial figures. Dessert came on Friday: “The most important number of the month”, the US labor market statistics for August. This was one of the very few figures that, in isolation, was slightly stronger than expected, but if you factor in the fact that the previous months were revised down, it is clear that the labor market is cooling down.
On top of that, unemployment increased from 3.5 per cent to 3.8 per cent, but the economists point out that these figures are associated with some noise.
The American stock markets rose sharply from the start of the figures, but after a short period of digestion, the rise more or less fizzled out during the evening.
Chief economist Kjetil Olsen at Nordea Markets says today’s employment figures convince the market even more that the Fed will take a break from raising interest rates in September.
Chief economist Kjetil Olsen at Nordea. (Photo: Elin Høyland) More…
– It smells like an interest rate break now. We are still open to another increase. We believe inflation will not come down as easily as everyone has concluded, says Olsen.
Olsen also believes that the increase in unemployment must be taken with a grain of salt.
– I didn’t get much wiser from today’s numbers. It is fine, but we are approaching the interest rate peak, he adds.
Chief economist Marius Gonsholt Hov at Handelsbanken agrees that today’s figures strengthen the assessment that interest rates have peaked in the US.
– There is, however, one important inflation figure remaining before the next interest rate meeting at the Fed, so we have to make a small reservation, says Hov.
Full roll in data stocks
Although there have been signs of the beginning of a cooling of the American economy in recent months, the central bank with Jerome Powell at the helm has left no doubt that the fight against high inflation is over.
Federal Reserve Chairman Jerome Powell has said that they are taking a data-driven approach to future interest rate decisions. (Photo: Alex Wong/Getty Images/NTB) More… The article continues below the ad
The long-term interest rates indicate that the market has really begun to accept a higher policy rate over a longer period, a sentiment that has also come to light in the stock market. The tech-heavy Nasdaq index ended on Thursday August as the weakest month so far this year.
The interest rate on US government securities with a maturity of ten years rose after the employment figures were published and continued throughout the evening before stabilizing at around 4.18 per cent around the end of the stock exchange. It is around the same levels as Tuesday earlier this week.
The price of oil has risen steadily throughout the day and a barrel of North Sea oil burnt, which is used as a reference for oil trading worldwide, is now traded at close to 89 dollars in the spot market.
Computer manufacturer Dell rose more than 20 percent after presenting quarterly results that exceeded analysts’ expectations. (Terms) Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links, which lead directly to our pages. Copying or other forms of use of all or part of the content may only take place with written permission or as permitted by law. For further terms see here.
Almost eight out of ten Americans think Biden (80) is too old, but what about Trump (77)?
A new poll from the AP-NORC Center for Public Affairs Research says that about nine in ten Republicans think Joe Biden (80) is too old for another term as president, as do about seven in ten Democrats. Donald Trump (77) is almost as old as Biden, but only about half of Americans say that Trump is too old for another term.
01:14
Published: 28.08.23 — 02:44
2023-09-01 20:26:15
#Olav #Chen #todays #market #waiting #game
