UBS On-Air: Market Moves

Jason Draho serves as the Head of Asset Allocation Americas at UBS Chief Investment Office, specializing in asset allocation and market analysis. He dives into potential sources of market volatility, from economic data uncertainties to Fed policy and the upcoming U.S. election. The conversation highlights the strategic use of options trading and recent economic indicators like CPI and PPI. Draho also discusses China's cautious fiscal plans and explores promising sectors, alongside fixed income and alternative investments like oil and gold for stability.

China’s much anticipated economy ministry press conference over the weekend did not give much detail. There were hints, and suggestions, and promises, but few clear proposals. International investors are looking for fiscal support because if consumers are restricting spending out of concerns for the future, monetary policy easing is unlikely to offer much help.

As we conclude another trading week, Matt reflects on the latest round of inflation data, along with recaps the September FOMC meeting minutes. We also spend time addressing current equity market valuations, equity positioning views, along with the commencement of corporate earnings reporting. Featured is Matt Tormey, Equity Strategist Americas, UBS Chief Investment Office. Host: Shiavon Chatman

US September consumer price data signaled disinflationary trends. Food prices have disproportionate political importance, but around 40% of the monthly increase in food prices was due to eggs. Can an election be swayed by an egg? Some key states saw food prices fall compared to August. Voters remember price levels, and tend to have an idea of a “fair” price for food items that would have been fixed in their minds many months ago. The political impact of this price report is probably marginal.

US September consumer price inflation should show a slower rate of growth in the headline measure. Now that the Federal Reserve has finally started its easing cycle, this matters a little less to markets, but it is still important. Critically, middle-income inflation is running at about half the headline rate, and that gives the group an important degree of spending power.

Ken Caplan, Global Co-Chief Investment Officer at Blackstone, and Jason Draho, Head of Asset Allocation Americas at UBS, dive into the shifting landscape of investment strategies. They dissect the U.S. economy's resilience amidst challenges in consumer spending. The duo discusses promising sectors like logistics and rental housing, and the growing significance of data centers in AI investments. They also explore global opportunities, particularly the optimistic outlook for India's economy and the evolving dynamics across Europe and Asia.

The minutes of the last Federal Reserve meeting are due, and should be fascinating. This meeting cut interest rates by 50bps, and had the first Fed governor dissenting in over two decades. Dissents may possibly be managed as part of the theater of the Fed—a single high profile dissent may mask wider disquiet at the scale of the rate cut. Certainly Fed Chair Powell’s dependence on dodgy data is looking a questionable strategy in the wake of recent (inevitable) data revisions.

October House View live conversation, featuring insights from Leslie Falconio, Head of Taxable Fixed Income Strategy, CIO Americas, and Paul Hsiao, Asset Allocation Strategist, CIO Americas. Recorded on Oct 3.

New York Federal Reserve President Williams—a genuine economist, who should thus be listened to —signaled that the Fed is happy with the state of the US economy and that two 25bp rate cuts this year would be appropriate. This clearer guidance for the future is a big improvement on Fed Chair Powell’s inept dependence on dodgy data.

On this week’s Snapshot, Jason reflects on the latest round of jobs data and weighs what a better-than-expected growth outlook means for the Fed’s monetary policy course into 2025. We also spend time outlining CIO’s current allocation views and guidance. Featured is Jason Draho, Head of Asset Allocation Americas, UBS Chief Investment Office. Host: Shiavon Chatman