Dropping another 1 million this week. Aeon Credit is still trading below its deserved valuation. I believe that Malaysian IBs are mis-pricing the stock. RM15 price target is way too low.
The Bank of Canada surprised markets last week when it ended its government-bond-purchase program and moved up the time frame for when it might first raise its benchmark interest rate from its current near-zero level.
Meanwhile, the Reserve Bank of Australia, which has a policy meeting on Tuesday, stunned investors when it declined last week to defend the 0.1% interest-rate target it had set on bond yields that mature in April 2024. Bond investors sold off government debt following the release of a stronger-than-anticipated inflation report.
The RBA’s move fueled expectations that it will scrap the program, known as “yield curve control,” at this week’s meeting. “If so, this is a startling about-face,” said Ben Jarman, an economist at JPMorgan Chase & Co.
Some investors and former Fed staffers aren’t so sure. Krishna Guha, vice chairman of Evercore ISI who was an adviser to William Dudley when he was head the New York Fed, says the rates market is getting it wrong on both sides - especially with U.S. stocks near their all-time highs. Stephen Jen, the chief executive officer of Eurizon SLJ Capital, goes even further, saying the market’s very low pricing of the peak policy rate is “ridiculous.”
While the rate markets backdrop seems to show “fear that central banks have boxed themselves into a corner and will be forced into hawkish policy mistakes that end up generating a weak economy, that is hard to square with strength in equities and credit,” Guha wrote in note with his colleague Peter Williams on Nov. 1.
Mr. Powell has clearly telegraphed that officials at their two-day meeting ending Wednesday will sign off on plans to steadily reduce their $120-billion-a-month bond-buying stimulus this month, with an eye toward phasing the purchases out by next June. With that settled, investors have turned their attention to when the central bank might raise interest rates from near zero.
Economists at Goldman Sachs last week changed their rate-path forecast to show the Fed raising rates from near zero next July, roughly a year earlier than their previous forecast. They expect the Fed will raise rates sooner because the current interval of higher prices will persist into the middle of next year, even though they still expect inflation to fall to 2% by early 2023.
Aggressive rate increases will close the “circle of troubles for equity investors,” said Peter Garnry, head of equity strategy at Saxo Bank, as it will spur a rise in input costs across commodities, energy, wages and financing, and reset already elevated stock valuations.
If policy is tightened too little too late, quality stocks with pricing power and the ability to pass on cost pressures should fare relatively well, said to Rupert Thompson, chief investment officer at Kingswood
Uncertainty over who will lead the central bank next year further muddles how the Fed might manage interest rates if inflation stays elevated. President Biden hasn’t said who will serve as Fed chair after Mr. Powell’s term expires in February.
In the recent past, presidents have announced their picks by this point on the calendar to ensure the Senate can confirm the nominee with ample time. Mr. Biden last week interviewed Mr. Powell and Fed governor Lael Brainard for the job and has said he will announce his decision soon. Both Fed officials have taken a similar view this year about the likelihood that inflation pressures would wane on their own.
Hotter inflation “is unlikely to endear Powell to the White House” and would be seen as strengthening the case for replacing him if the other leading candidate for the job, Ms. Brainard, hadn’t staked out a position this year favoring even looser monetary policy, said Krishna Guha, vice chairman of Evercore ISI, in a note to clients on Wednesday.
High inflation also increases the prospects that Republicans will be united in opposition to any of Mr. Biden’s nominees except for Mr. Powell, who has received several endorsements from lawmakers in both parties. “With no margin for error in the Senate,” said Mr. Guha, “Biden could face real difficulty getting a Powell replacement confirmed.”
This market is really not fun at all. Sporadic rise in bond yields and excessive retail support. I am sure all analysts have no idea where the market is heading next month
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
supersinginvestor
3,369 posts
Posted by supersinginvestor > 2021-10-25 10:13 | Report Abuse
Buy and hold.....target rm30