So with earnings out, not bad overall, management can start buying their shares in beaten down names again…has the market dropped too far? A little bounce for 1-3 weeks before resuming its downtrend? Or will the commodity complex pull the market back up. Companies and markets are in a (here’s a professional term) funky place.

The bull argument: Massive demand recovery

  • Full on reopening in 2H22 for ASEAN, europe, US, middle east, India etc.
  • Full domestic reopening for China.
  • Listed companies are winning the market share away from their private peers

The bear argument:

  • Every cost is higher, commodities, supply chain, financials etc etc supply chain issues = higher inventory requirements = additional costs for warehousing etc etc
  • This leads to margin compression.
  • Higher rates = higher cost of capital = discount for the market higher = market lower. Very simple.
  • If every bank around the world calls back their loans, 50% of companies with debt are bankrupt.

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