Previous Research SLOOS Data Suggests Delinquencies Set to Rise
Airtham regularly releases a “Do-Not-Buy” list for the Nifty 500. This list contains companies with a negative 1-year outlook according to Airtham’s AI, and backtest data suggests that simply avoiding these companies can improve a portfolio’s returns. Moreover, beyond the use of avoiding individual stocks with negative outlooks, these forecasts are also useful for assessing broader sectoral trends and the aggregate market outlook.
The latest “Do-Not-Buy” list, which was released on May 1st, provides insightful sectoral outlooks for India. Among the sectors covered, construction, O&G, FMCG, financial services, and auto have less than 50% of their constituents with a negative 1-year outlook. On the other hand, telecom, IT, durables, and chemicals have more than 60% of their constituents with a negative outlook.
Considering the possibility of a global slowdown within the next year, the resilience of the auto and O&G sectors seems surprising, while the negative outlook for telecom, durables, chemicals, and IT appears plausible.
If you’re looking to build a portfolio for the year, these outlooks can be helpful in choosing sectors that will likely perform and avoiding those that won’t.
Can US Skip the Recession?
The most recent labor market data paints a concerning picture of overall weakness. Typically, the effects of changes in interest rates take some time to ripple through the economy. Historically, this lag has been around 18 months. Interestingly, this pattern held true as, precisely 18 months after the initial rate hike in March 2022, we are now witnessing the visible impact this month. The Federal Reserve consistently raised rates throughout 2022, suggesting that the consequences of these consecutive hikes will continue to materialize as the year unfolds.
SP500 & Inflation Update: Aug 2023
Airtham Macro Research: The July headline CPI release followed predictions of a slight increase, yet the actual magnitude was less significant than anticipated. This outcome sparked optimism within the market, leading to a surge in activity and speculation of a potential pause in rate hikes. However, this optimistic rally was short-lived as market participants quickly adjusted their expectations. The weaker-than-expected inflation reading meant a potential decline in economic demand. This perspective gains support from jobless claims data released a few days back, that showed claims rising to a 1.5-year high. Consequently, there's now a debate over whether further inflation reduction is beneficial or detrimental to the markets.
What’s Happening to US Tax Receipts?
One of the most crucial indicators for gauging the health of a country lies in its government tax receipts. When tax receipts rise in tandem with economic growth, it signals a thriving nation. Conversely, economic downturns often witness an accompanying decline in tax receipts. However, what's truly concerning is when tax receipts decline despite a healthy and expanding economy.