Global markets

A conversation with Societe Generale's Eric Kim, Head of Power, Energy, Mining & Industrials for the Americas

In conversation with Jeff Mortara, Global Co-Head of Equity Capital Markets and Head of TMT Investment Banking for the Americas.  

Following months of breakneck gains in equities on the back of expected deeper monetary easing and the AI-fueled momentum in economic growth, markets are suddenly stalling with bearish overhang as a result of concerns about tariffs, renewed inflation and its negative outlook for the rate path.

History can tell us a lot about how markets perform in the wake of monetary easing. In anticipation of rate cuts in the U.S., we talked with Solomon Tadesse, Head of North American Quant Equity Research at Societe Generale Americas, about how expected rate cuts from the Fed will impact US markets.

Stephen Gallagher, Societe Generale’s chief US economist, thinks that the high levels of goods purchases will soon drop back to historical trend levels. He illustrates this with the example of people no longer going to the gym during the pandemic (service expense) and instead buying exercise equipment (goods) to use at home.

The oil outlook has improved considerably over the last few months and much of the success in reducing the massive volatility and creating the stabilization of prices is down to OPEC+ being extremely effective in managing supply to balance the market.

Reports of an imminent, and highly effective, vaccine against COVID-19 point to much stronger commodity demand. Once there is more information available on the vaccine, the base forecasts will be reviewed.

In their 2020 Outlook report, our credit analysts warned that investors faced “A tale of two scenarios.”

The market consensus has turned overwhelmingly bullish recently, as a growth recovery plus ample liquidity presumably creates a rising tide that lifts all boats, including EM assets.