We have already been systematically reducing forecasts through Q1 earnings to reflect a benign normalization of COVID demand combined with an assumed shallow economic slowdown. However, US inflation has spiked to the highest level since 1981 and our economists further reduced economic growth forecasts for the US on June 20 and increased their assessment of recession risk to 30% at the same time. Against that backdrop, investors have been asking us what company fundamentals and valuation might look like in a more severe 2008/09 style slowdown. In this report we answer that question in detail, for the 27 companies we cover. We also further trim select base case models to account for further reduction in economic forecasts, since earnings. Given we have been proactively adjusting ratings as data presented itself we maintain our ratings. We would point out that our consumer electronics coverage generally has the most downside risk to fundamentals should a worse downturn in demand, vs. our base case, materialize but our datapoints as of this writing are still consistent with a shallow slowdown similar to our economists' current forecasts. The potential for combined fundamental and equity valuation downside is higher for debt levered names such as VVNT (-83%), COMM (-59%), and AVYA (-49%) and consumer electronics names such as AAPL (-41%) and CRSR (-49%). Downside risk is lower for infrastructure oriented stocks like CMBM (-15%) and INFN (-9%). Looking at just larger cap stocks we see the greatest potential downside risk in HPE and AAPL and the least in CIEN, QCOM, ANET and PSTG.

보고서: 아직까지 얕은 수준의 침체를 예상하지만, 침체가 더 심화될 경우 특히 소비에 의존적인 기업의 가치 훼손이 매우 클 것임. (Goldman Sachs - Assessing deep recession risk for 27 companies; Trimming Base cases further as recession risk increases)

Concern about the impact of a stronger dollar on corporate profits is coming into sharper focus as earnings season nears. That’s come with even more focus than usual aimed at company results due to mounting forecasts for a recession, and following recent high-profile disappointments. Investors have for months anticipated the dollar would keep strengthening. And now the rally just keeps getting “bolder and more alluring," as my colleague Ven Ram put it. Expectations for the Fed to keep hiking, along with a flight-to-safety bid amid anxiety about the Ukraine war and global growth, can keep the dollar strong. Conviction is growing that the euro’s about to break parity with the dollar.

함의: 미국 기업 이익에 부정적 영향을 미치는 달러 강세가 더 심화 될 환경에 있음.

China accused the US of “technological terrorism” in pushing to stop ASML Holding NV and Nikon Corp. from selling key chipmaking technology to the country, in some of its strongest criticism yet of Washington’s efforts. Chinese Foreign Ministry spokesman Zhao Lijian lashed out at Washington after Bloomberg News reported the US is lobbying allies to stop the sale of mainstream technology essential for making a large chunk of the world’s chips, expanding a years-long campaign to curb the country’s rise. He didn’t say whether China planned any retaliatory measures in response to the move. 

함의: 핵심 칩 기술 판매에 대한 갈등 속 미국의 행동을 테러라고 표현할 정도로 긴장감이 고조되고 있음.

Federal Reserve officials became more resolved last month to keep raising interest rates for longer to prevent higher inflation from becoming entrenched, even if that slowed the US economy. Policy makers increased interest rates by 75 basis points last month and backed hiking them at their next meeting in July by either 50 or 75 basis points, according to minutes of the Federal Open Market Committee’s June 14-15 policy meeting released Wednesday in Washington. They viewed maintaining the central bank’s credibility to control inflation as crucial.

함의: 의사록을 통해 인플레이션을 반드시 잡겠다는 의지를 다시 한 번 확인함.

Apple is now offering "extreme" security protections for iPhone, iPad and Mac devices. The optional feature, called Lockdown Mode, is designed to prevent targeted cyberattacks on high-profile users such as activists, journalists and government officials. The tool vastly reduces the number of physical and digital ways for an attacker to hack a user's device and is primarily intended to combat attacks from spyware.   

함의: Good.

Rising rates and global recession threats are sending traders scurrying to the safety of the dollar — and it's whacking EM currencies. The MSCI EM Currency Index dropped for a second day on Wednesday. Leading losses: the Russian ruble, the Colombian peso, the Philippine peso and the South Korean won. "No matter how things turn out, it's bad for EM," Win Thin at Brown Brothers Harriman wrote.

함의: 신흥국 통화가치 하락이 지속될 수 있음.

Signs are mounting that China’s economy shrank in the second quarter for the first time since 2020, placing the nation’s official statistics under fresh scrutiny as analysts bet the government will avoid acknowledging that slump. The evidence from alternative indicators is overwhelming of an ongoing slump in the economy. Travel data shows passenger trips taken on China’s roads were mostly below last year’s levels into July, according to transport figures analyzed by TS Lombard. The number of domestic flights in the quarter was down 62% from the same period last year, according to data provider Variflight. The movement of trucks carrying goods between cities, which researchers say are closely correlated with GDP, show weak activity. In the last week of June there were still about 20% fewer trucks on the nations roads compared to a year earlier, according to data from G7 Connect, a digital logistics firm.

함의: 중국 경기 추적이 가능한 대체 데이터는 헤드라인 지표보다 경제 둔화가 더 진행되었다고 함.

China stocks face a tough open after the Nasdaq Golden Dragon China Index fell as much as 6.4% in the US. The S&P 500 was little changed, suggesting an uninspired session ahead for the broader Asia stock market. The news flow is running bearish on China:

• The PBOC looks set to withdraw cash from the financial system.
• China accused the US of “technological terrorism” in pushing to stop ASML and Nikon Corp. from selling chipmaking technology to the country.
• Rising Covid-19 infections across Shanghai raised the specter of another lockdown. Cases are rising in Hong Kong’s hospitals.
• The top US official in Hong Kong urged China not to further endanger the laws and values that helped the city.

함의: 부정적 뉴스 플로우가 집중되면서 미국 상장 중국 주식 지수는 큰 폭 하락함.

Carlyle Group Inc.’s new $8.5 billion Asia fund aims to have as little as half the exposure to Greater China as previous funds, driven by investor concern over rising geopolitical risks and regulatory uncertainty in Beijing, according to people familiar with the matter. The Washington-based asset manager is telling investors that the targeted China exposure for its sixth Asia fund will be about 20% to 40%, compared with 40% to 50% on average for predecessor funds, said the people, asking not to be identified as they’re not allowed to discuss fundraising.

함의: 칼라일의 신규 아시아 투자 펀드는 지정학적 위험과 규제 불확실성으로 인해 중국 비중을 기존 펀드에 비해 절반으로 줄여서 운용할 계획임.

Samsung Electronics Co. reported its slowest profit growth in more than two years after rising materials costs and lukewarm consumer demand squeezed margins. Operating profit rose to 14 trillion won ($10.7 billion) for the three months ended June, South Korea’s biggest company said Thursday in a statement. Analysts had estimated 14.6 trillion won on average. Sales increased 21% to 77 trillion won, slightly above estimates. Samsung will provide net income and split out divisional performance with its full report at the end of this month. 

함의: 삼성전자 실적, 원자재 가격 부담과 수요 둔화로 2년래 가장 느린 성장을 보임.

FBI Director Christopher Wray warned Western companies that China aims to “ransack” their intellectual property so it can eventually dominate key industries, escalating a dispute between the world’s two largest economies over hacking. The Asian nation’s spies were snooping on “companies everywhere from big cities to small towns -- from Fortune 100s to start-ups, folks that focus on everything from aviation, to AI, to pharma,” Wray said in remarks to a gathering of business leaders and academics in London. He appeared alongside the head of MI5, Ken McCallum -- the first time the heads of the Federal Bureau of Investigation and the UK’s domestic counter-intelligence agency have shared a forum.

함의: FBI 국장이 중국은 지적재산권 약탈로 핵심기술을 지배하려 한다고 노골적으로 공격함.

South Korean hedge fund Billionfold Asset Management Inc. said it started buying Samsung Electronics Co. this week on the view the stock’s plunge of almost 40% from a record high is coming to an end. Excessive selling has made Samsung shares attractive, An Hyungjin, the chief executive officer of the 170 billion won ($130 million) fund, said in an interview in Seoul on Wednesday.  “We are nearing the bottom,” An said. Samsung shares were up as much as 3.2% in morning trading in Seoul Thursday after the company reported a better-than-anticipated 21% jump in revenue, assuaging investors’ worst fears about the impact of weakening consumer demand and soaring materials costs on tech giants. The fund posted a 1% loss during the first six months of this year, An said, outperforming the benchmark Kospi’s 22% slide and Kosdaq’s 27% slump.

함의: 상반기 하락을 적극 방어했던 국내 헤지펀드가 삼성전자에 대한 긍정적 투자의견을 제시함.

Deflating global goods demand, improving supply chains, falling commodity prices and limited wage pressures suggest to us that Asia’s inflation risks have peaked. Consequently, central banks will not need to hike rates to the extent that markets are pricing in.

보고서: 아시아 지역의 인플레이션인 정점을 지나고 있어 중앙은행이 지나친 긴축을 지속할 이유는 없어 보임. (Morgan Stanley - Asia's Inflation Risks Have Peaked)

Lombard Odier fund manager Aurele Storno says he holds an embarrassingly high level of cash in his portfolios but sees few better alternatives as risks abound across most asset classes. The Swiss firm, which has been managing money for the wealthy since 1796, is running more than 50% cash across the $4 billion in a fund strategy that Storno manages. Aside from a brief period a few weeks ago, that’s the highest level since the depths of the pandemic, when cash was at 65%. “I feel very uncomfortable, very embarrassed -- I don’t like to have cash because people are paying me to invest money,” Storno said in an interview from his London office. “But at some point when everything goes wrong, you know, the saying goes, ‘cash is king.’ There’s no way to hide.”

함의: 고객이 투자하라고 맡긴 돈을 현금으로 두긴 싫지만, 불확실성이 현실화 됐을 때를 대비해 대유행 당시에 근접하는 현금을 보유하고 있다 함.

US stocks rose as fears about inflation and the pace of monetary tightening faded, while commodities got a boost from China’s $220 billion stimulus plan. The S&P 500 and the Nasdaq 100 climbed for the fourth straight day. The US two- and 10-year yield curve remained inverted for a third day. US jobless claims rose last week, signaling that the strength in the labor market is moderating. Commodities from oil to copper rose as the dollar retreated for the first time in five days.

함의: 인플레이션 우려 완화, 중국 대규모 부양 등 호재로 주식은 나흘째 상승, 국채 수익률 역전은 사흘째를 기록 중임.

Mortgage rates in the US posted the biggest one-week decline since 2008. The average for a 30-year loan fell to 5.3%, the lowest in a month and down from 5.7% last week, Freddie Mac said in a statement Thursday. Buyers are getting a slight reprieve from this year’s massive rise in rates that has started to cool parts of the US housing market. The jump in costs has pushed more buyers out of the real estate hunt, causing inventory to increase. Sellers have started to cut prices in certain areas. “While the drop provides minor relief to buyers, the housing market will continue to normalize if home-price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” said Sam Khater, Freddie Mac’s chief economist. 

함의: 모기지 금리 1주 하락폭이 2008년 이후 최대치를 기록했고, 주택 가격의 과열이 진정되는 움직임이 보임.

The latest data signal US consumers are willing and able to spend. That, and a still-hot labor market, can ease concern about the brutality of whatever potential recession may be looming and support equities. Fresh credit and debit card figures from BofA show consumer spending rose 11% year-over-year in June (versus April’s 13% and May’s 9%). The bank said spending showed signs of resiliency and that services spending, including travel and entertainment, continued to be boosted by pent-up demand, while balance sheets are in good shape. There are caveats, as inflation is clearly stinging, and demand for domestic travel may be waning. Inflation’s particular pain for lower-income households shows with the share of spending on gas climbing to 9.8% in June from 7.7% in February.

함의: 일부 데이터에서는 미국 소비 여력이 여전하다는 것을 알 수 있음.

China is considering a $220 billion stimulus to boost the economy. The Ministry of Finance may allow local governments to bring forward sales of 1.5 trillion yuan of bonds to the second half of the year — mostly to be used for infrastructure spending — from next year's quota. It's the first time the issuance has been fast-tracked in this way, underscoring growth concerns in Beijing. Commodities and US-listed Chinese stocks rallied.

함의: 중국이 2,200억 달러의 대규모 부양책을 고려하고 있으며, 방식과 속도에서 성장 둔화를 피하겠단 의지를 확인할수 있음.

Don't get too optimistic about US stocks, volatility traders are signaling. The call-put option on the VIX jumped on Wednesday to levels unseen for some two and a half years, driven by bets on fresh market turmoil. The hedging activity stands out given the fact Wall Street's fear gauge has failed to hit new highs since March even as the S&P 500 careened to fresh lows.

함의: 낙관론자는 지수가 연 중 최저를 기록할 때 공포와 탐욕 지수는 그렇지 못한 점, 수요일 변동성 지수에 대한 풋 옵션 대비 콜 옵션 매수 비율이 2년래 최고치를 기록한 점을 유의해야 함.

US General Mark Milley spoke with his Chinese counterpart General Li Zuocheng, the latest sign of increased communication ahead of a pending Joe Biden-Xi Jinping call. They discussed "improving crisis communications and reducing strategic risk," a US spokeman said. Li told Milley the US should end military "collusion" with Taiwan, China said.

함의: 말만 많을 뿐.

Two of the Federal Reserve’s most hawkish policy makers backed raising interest rates another 75 basis points this month to curb inflation, while playing down fears the US economy was headed for recession. Governor Christopher Waller and James Bullard, president of the St. Louis Fed, both stressed the need to get policy into restrictive territory to confront the hottest price pressures in 40 years, even if this meant slowing growth. Both are voting members of the Federal Open Market Committee this year.

함의: 매파적 성향의 연준 인사 둘은 희생을 감수하더라도 75bp 금리인상을 통해 물가 통제를 우선해야 한다고 주장함.