Kaohoon Morning Brief – 20 October 2022

1) FSS remains bullish on SET Index outlook, but could move sideways-down after unable to break resistance at 1,595-1,600

Finansia Syrus Securities (FSS) expected the SET to move sideways down in the short run after it tested its resistance at 1,595-1,600 points but failed to break it. Also, the sentiment turned more bearish after U.S. bond yields extended their rallies. According to the latest data, the 10-year bond yield hit 4.13%, the highest since 2008, while the two-year bond yield stood at 4.57%. They reflected the market’s view of aggressive rate hikes in the next 1-2 quarters. At the same time, the continuous inverted yield curve signals a recession in 2023. They limit risk assets’ recovery, particularly in the U.S. and Europe, at this time.

However, FSS maintained its bullish view of the SET Index outlook. It should outperform its peers due to the economic uptrend. The spotlight is on banks’ 3Q22 earnings season and the real sector’s earnings preview. Given all that, FSS still prefered domestic and reopening plays in 4Q22-2023.


2) BNP sees Fed funds terminal rate at 5.25% by 1Q23

BNP Paribas now expected a terminal Fed funds rate of 5.25% by 1Q23, higher than market expectations and the level that could cause recession to the U.S. economy.

The firm stated that the recession is likely to start around 2Q23 and be prolonged for three to five quarters.

“We expect a more aggressive Fed response to stickier, more pervasive inflation to push the economy into recession,” the French firm said in a research note.

“And in our view, the same inflationary dynamics which now make a non-recessionary outcome unlikely will similarly constrain the Fed from rapidly reversing course in the early stages of the downturn,” it added.


3) Tesla stocks fall 6.25% after missing revenue expectations

Tesla’s stocks plunged 6.25% after hours of Wednesday’s trading session after missing revenue expectations on 3Q22 revenue.

The revenue in the third quarter of 2022 was $21.45 billion, compared to $22.09 billion expected. However, the adjusted EPS was slightly higher at $1.05, compared to $1.01 expected.

Still, Tesla CEO Elon Musk still see Tesla hitting a record for the 4Q22 deliveries.


4) BOJ to conduct emergency bond-buying program as yen near 32-year low

Japan’s central bank is expected to operate an emergency bond-buying program, offering to buy some $667 million in government debt as the Japanese yen is edging closer to break 150 level to the dollar.