Inflation, Deflation


Thoughts on Week Ahead:
Week 14 Aug 2023

Inflation, Deflation
US is facing sticky core inflation situation with core producer price index (Core PPI) rebounding 0.3%, as China battles deflation with loan growth at its slowest since 2009. Market continues to price in US FED to maintain current rate policy with the possibility of one more 25bps hike at later this year, adding pressure to the equity markets.

S&P 500 hits profit taking mode after touching 4,600 on 27 July. Technically, we are monitoring for supply exhaustion as the index nears first support at 4,300.

China recovery remains bumpy with data points such as loan growth stays on the weak end of the story. For tactical trading, we look for Chinese companies that are economy neutral or are benefiting from structural trends such as China Mobile (941 HK).

For the week ahead, we will monitor market leaders that potentially recovery earlier than the general market. These companies may include those that are benefiting from rising oil/commodity prices.

Headlines for Week Ahead:
US Corp Earnings (Home Depot, Cisco, Walmart, Deere & Co, Target and Applied Materials)
China Corp Earnings (, Tencent, CNOOC)
SG Corp Earnings (SGX, Golden Agri)
US FOMC minutes 
US Retail Sales, Industrial Prod
China Economic Data

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