For educational purpose only.
1. There are few macro opportunities outside of major policy movements. The Fed needs to take a stance on inflation/recession. Inflationary countries need pro-growth policies, while deflationary countries need a fiscal boost.
2. If the Fed falls behind the curve, it is less likely that a recession will occur, promoting liquidity across the global spectrum. However, if they trigger a recession, inflationary countries and some European countries will experience inflationary headwinds.
3. During and after a recession, Global liquidity will be scarce, and countries with imbalanced economies will experience increasing pressure.
4. The US Portfolio (Recovery & Melt-up Portfolios) that performs well when liquidity rises does not reflect the post-recession scenario in its pricing.
5. Similarly, Mexico and other inflationary countries do not reflect the risk of inflationary headwinds if the wind changes.
6. The portfolios of stocks that perform poorly in low liquidity environments have begun to reflect the pricing of such environments. Are they too early to jump into a post-recessionary environment?
7. It could be that others are lagging behind, or leading ones could be due to over-excitement or impatience.
Source: Refinitiv and Author's Calculations
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