Weekly investor research
VIX spike last Monday an overreaction, but market psychology may have changed
- Markets retraced losses after a very reactive VIX spike and risk sell-off last Monday.
- LATAM and China equities outperformed, due to their lower valuations and resulting lower beta to deteriorating global growth prospects.
- Steadier US data assuaged market concerns of sudden economic deterioration.
- However, as the economy continues to slow down, the narrative is shifting from ‘when will cuts happen?’ to ‘will cuts work?’
- Rate cuts despite higher food prices in Mexico and Peru indicated central bank confidence that the US will embark on a cutting cycle from September.
- TSMC reported good earnings but raised concerns that the next few months may be slower.
- Diplomatic efforts made by US to avert an aggressive Iranian reaction to Israeli assassinations inside Tehran, with more Gaza ceasefire talks scheduled this week.