UBS On-Air: Market Moves

Investors’ sudden discovery of China’s DeepSeek arguably reminds markets of the Fukushima Effect —people adapt when facing adversity (e.g. restrictions on China’s access to technology). On a larger note, output economics and GDP tend to ignore the benefits of efficiency. A culture that venerates GDP is a culture that may miss out on the benefits of a more efficient world.

Despite markets reacting favorably to week one of Trump 2.0, Jason explains why expectations should be managed when it comes to market price action. We also preview this week’s round of Q4 earnings, along with the FOMC meeting. Plus, thoughts on developments surrounding DeepSeek, and the impact to the US Technology Sector. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Daniel Cassidy

China’s industrial profits grew in December, with profit margins seemingly more or less stable. This has a bearing beyond China’s borders because if China were “dumping” products by exporting below cost, profitability would suffer. Dumping might still happen in certain sectors, but the official data does not support it happening generally.

We provide a performance update and outlook for the municipal bond market, along with share views on positioning within the asset class. Plus, spend time assessing the implications of the ongoing California wildfires to muins. Featured is Sudip Mukherjee, Fixed Income Strategist Americas, and Jeannine Lennon, Municipal Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

The Bank of Japan raised interest rates a quarter point, as had been signaled in the media in advance. The BoJ appears to have confidence in rising wages, and like other central banks is following the trend of inflation (the difference is that Japan’s trend is rising). We expect one further rate increase this year.

Jason and Paul rejoin in-studio to share their revised assessment as to whether the US economy is still on track to mirror a “Roaring 20s” scenario this decade, this as we’ve reached the mid-point of the 2020s. Featured are Jason Draho, Head of Asset Allocation Americas, and Paul Hsiao, Asset Allocation Strategist Americas, UBS Chief Investment Office. Host: Daniel Cassidy

Japan’s December trade data had weaker imports and stronger exports than had been expected. Exports to the US declined, which rather argues against pre-trade tax stockpiling in the US (though there may still be time for that). The absence of stockpiling would likely speed the impact of trade taxes on US consumers.

Burkhard Varnholt, a seasoned financial expert, shares insights from the World Economic Forum in Davos, where he immerses himself in the discussions surrounding artificial intelligence and global challenges. He highlights the economic optimism evident in Europe's tourism sector and delves into the potential impacts of a Trump presidency on European markets. Varnholt also draws intriguing parallels between past political events and current market trends, especially regarding energy prices and future stock performance.

Amantia Muhedini, the Sustainable & Impact Investing Strategist at UBS, shares her expertise on the evolving landscape of sustainable investing. She discusses the implications of recent political shifts on climate initiatives and reflects on the transition from greenwashing to green hushing in corporate sustainability. Amantia emphasizes the need for transparency in investments and highlights ten crucial expectations for sustainable investing by 2025, encouraging investors to adapt to this dynamic market while maintaining sustainability goals.

In this engaging discussion, Jeremy Zirin, a Senior Portfolio Manager at UBS Asset Management, shares insights on the performance of the US equity markets, highlighting impressive gains of over 25% for the S&P 500. He delves into the challenges posed by rising interest rates and their impact on sensitive sectors, while also discussing the risks of market concentration among top stocks. Additionally, Zirin evaluates how the upcoming administration's policies could shape market dynamics, balancing growth initiatives with potential trade and fiscal concerns.