March sixteenth, twenty twenty-five (250310-250316)
Markets are at the intersection of macroeconomic uncertainty and policy asynchrony. The effects of geopolitics, cracks in American exceptionalism, and misaligned monetary policies are gradually becoming apparent. The valuation premium in U.S. equities is narrowing, and the P/E is approaching its historical average, The valuation advantage of technology stocks is shrinking as Nasdaq earnings growth slows, directly affecting the valuation of the technology sectors in Taiwan and South Korea.
Expectations of Fed rate cuts are strengthening, the effects of the tightening over the past two years will gradually ease, Dollar depreciation could drive capital inflows into Asian markets In Japan, policy continues to shift toward tightening, yen volatility is rising, government bond yields are climbing, foreign capital inflows are constrained, and exporters’ earnings expectations are under pressure. China, meanwhile, is maintaining an accommodative policy, combining fiscal expansion with monetary easing, but deflationary pressures have not yet fully subsided. It may bolster liquidity support in the future by expanding government bond issuance.
The logic behind our European, yen, and China trades remains unchanged; we are continuing to hold them as discussed before. It is now harvest season: our seeds are flowering and bearing fruit one by one. All that remains is to “sit tight.”
Chart: The S&P 500 is showing recession-pricing characteristics
The market generally believes, based on experience from Trump’s first term, that any sharp decline in stocks would prompt some easing of related policies, such as tariffs, to reduce the market impact. However, so far, there have been no signs of this In an article published earlier this week, Bloomberg columnist John Authers explored this point in “Why Trump Cares Less About Market Pain This Week” (Why Trump Cares Less About Market Pain This Week) explored this point
One point is particularly interesting:
An analysis from investor Chamath Palihapitiya, who said on X:
1. Trump is more popular among young people than among older people, and most young people do not own stocks or real estate (that is, they are “asset-light”).
2. Trump has greater support among the working class and middle class, and these groups are also “asset-light.”
3. As a result, declines in asset prices, whether in the stock market or housing market, have a limited impact on his core voters. From this perspective, Trump may not react strongly if the stock or real estate market corrects.
He further noted that A market correction could instead create an opportunity for these groups to buy assets and benefit from the next upswing. It could also correct the wealth gap caused by persistently low interest rates and inflated asset prices. Palihapitiya even suggested that Trump may now prefer the stock market to fall rather than rise.
The weekend is over. Wishing everyone who made it this far a happy time and all the best for the new week!
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Note: All content in this article is for reference only and does not constitute investment advice or serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for their decisions.