When we look at the indicators in the markets, the major fluctuations we have seen especially in the summer months have caused significant changes in the global markets. Emerging markets and low-capital technology investments are gaining strength again with the falling interest rates.
The FED's starting interest rate cuts with a 50 basis point cut was perceived positively and the support of other countries for the relaxation cycle is blowing a wind of optimism in the global markets. The strong economic data coming from the US supports investors' risk-taking desires and enthusiasm.
The Societe Generale Momentum Indicator has also reached its highest level in 1 year and there are remarkable increases in the momentum of assets such as copper, gold and various stocks.
Although it is my personal opinion, I expect the enthusiasm and positive atmosphere in the markets to increase thanks to the interest rate cuts and Chinese incentives on a global scale and probably many investors who cannot compensate for their losses by staying in short positions will necessarily take a long hedge position from historical levels if there are no major declines.
As the economic data comes in strong, the soft landing narrative will remain on the agenda for a while longer, and then this situation will pave the way for new ATHs, increasing enthusiasm and prices. However, as the deterioration in the data increases in 2025, many people will unfortunately learn the painful way that the soft landing narrative is artificial. Although I still think that it is too early to take short positions for other risky assets such as the US indices and Bitcoin, and that there are still peaks to go, it would be a serious mistake to carry positions without taking hedging options on this path. For this reason, in addition to my VIX positions, I take other hedging options in derivative markets in return for all the risky assets I have.
We are entering a difficult month for the American stock markets. There are around 35 days left until the elections, and with so little time left until the elections, American stock markets have always tended to fall. Octobers have always been negative, especially during election years. Of course, the past is not a sign of the future. I am only talking about statistics, and if October is going to be bad, this week seems to be the most difficult week. Because there is a lot of data flow this week and these data flows caused sharp declines in the first weeks of August and September. Also remember, the reason for the decline in August was the turmoil in Japan. Japan seems to be a bit chaotic right now. Right now, Japan's main index, Nikkei, is lagging by around 4.5%. Because it is said that the newly elected Prime Minister is in favor of a little more monetary tightening.
On the other hand, China is going crazy. China seems to be very positive today as well. Due to the incredible money printing by the Chinese government, very sharp movements are flowing into the stock markets. Brokers are being tried to be open 24/7 right now. There is so much demand in China. Within the framework of all this, we are entering the first week of October and important data flows seem to have an impact in America. Let me say this from the beginning, I would not be surprised if October ends slightly negative. But I do not expect a very sharp decline, at least for now. Because when so much money is being printed, it is very difficult for the stock market in the world to go back very far. As you know, in America, interest rates have already loosened. Data from last week showed that inflation in France and Spain fell below 2%. In this case, it seems possible to cut interest rates in the European region. Switzerland lowered interest rates. There is a halt in economic growth in Canada, another interest rate cut is possible. When money is plentiful, stock markets do not go down too much. Let me say they make corrections but do not go down too much, and now let's focus on this week's data.
On Monday, FED directors are speaking. First Michelle Bowman but more importantly Jerome Powell are speaking. What Jerome Powell, the FED chairman, will say is important. He also gave a speech last week but he did not touch upon the money markets at all. Again, I do not think he will say anything very important but the markets will be attentive. There are more important data flows on Tuesday. First of all, the ISM PMI is coming for the manufacturing sector. It is certain that it will come below 50% here again, it was 47.2% last time. Below 50, as you know, indicates a slowdown in the economy. The important thing is for it to come below 50 but to curve upwards, even if only slightly, from 47.2. This is also possible because there were increases in the local ISM data. For example, there were in New York, I think maybe that will be reflected here as well. It would be good if it went up slightly or remained constant or did not go down too much, an excessive decrease is a sign of recession, and an excessive increase would scare the FED. I expect such a balance. Jolt is coming on Tuesday. What is jolt is newly opened businesses. The last month it came was 7.7 million. It is possible to expect the decline to continue here. Because interest rates are still high. And uncertainties are increasing as we enter the election period. I do not expect such a big increase here. If it reaches these levels, a slight decline is better for us anyway. Then Lisa Cook from the Federal Reserve speaks again. Then Tom Barkin from the FED speaks. Bostic, the president of the Atlanta FED, speaks. Susan Collins, the president of the Boston FED, speaks.
On Wednesday, ADP private sector new employment data will come. As you know, this is a private institution, it does payroll work. It does this based on its own data. Last month, 99,000 came, it was quite low. There is a possibility that it will come back low. Then there are 4 FED speakers that day. Thursday is an important day. Because new unemployment claims are coming and the service PMI is coming. The service PMI is more important for us. Because America is a service country. The last time it came was 51.5, a slight decrease compared to the previous month. I hope it maintains these levels or there may be a very slight decrease or a slight increase. In other words, it is important for us not to make too many changes. Because the FED has a new meeting on November 4-5, right after the election, and I want a 50 basis point reduction there. So I don't want these places to be too good or too bad because of the fear of recession. I think it will come somewhere between 51 and 52.
On Friday, the most important data will flow. The United States employment data is coming, the market is expecting 144,000 in nonfarm payroll, it was 142,000 the previous month. I hope nonfarm employment will come at these levels. The unemployment rate is expected to be 4.2%. I agree, I don't expect much movement here. 0.3 is expected in salary increases. Frankly, I also think that this will come within this framework. In other words, I don't expect any weird jumps up or down in the upcoming data. So this week will probably be a bit unpleasant. No one will enter the stock market with such courage when there is so much data flow. But if there is no sudden madness in the data, I think there is a high probability that things will not go badly.
The main game is China, what is going on in China. That is critical. In this context, I would like to give you a little tip. I am not a fan of being an investor in China, frankly, about which ETFs to invest in for China. But there is a great opportunity in trade. In other words, there seems to be a great opportunity in shorter-term transactions and if China continues to print so much money in the next 3 to 6 months, it is certain that this will benefit China's stocks. But you cannot invest in some of the Chinese stocks directly. Choosing Chinese stocks is also a difficult thing. So if you want to be in the Chinese stock market a little, ETFs are more useful. So let's take a look at what there are as Chinese ETFs. For this purpose, we will go to tipranks.com. They have very practical tools in ETF screening. You can enter the ETF Screener section in the Tools section. Here, I chose China as a filter, I chose ETFs that invest in stocks and the ones that are highly appreciated by analysts. There are different options here. I looked at the ones that outperformed 8 - 9 - 10.
Tipranks shows us the tips of American Wall Street analysts. These points are given according to their rankings. I chose high points here and chose those with an upward potential of 10% - 20%. According to the estimates of these Wall Street analysts, which will probably increase this a little more in the coming days within the framework of recent developments. When we look at it this way, two etfs stand out. One is abbreviated as PCCE Polen Capital China Growth etf, the other is JCHI JPMoran Active China etf. These seem to be the most prominent ones. If we remove the criteria here, outperform and upsides, in this case the etf list expands quite a bit. You can do this activity yourself. I have been supporting KWEB for a long time. But today I realized that KWEB is not the best etf. FCA and PCCE seem to be better. Let's increase the Smart Score a little again and look at the details of those two etfs. When we look at the Upside, which is expected to increase by 10% - 20%, i.e. between 10% - 20% or above, and receives a rate of around 8 - 9 - 10, we come across two.
Let's remember again PCCE and JCHI. When you click on these, you can reach the details of these ETFs. They gave moderate buy to PCCE. Here you can see the analysis, the holdings, which are the stocks in this ETF; Tencent, for example AIA Group, Haier Smart, trip.com, BYD, you can see all of these and you can see the analysis about the performance of this ETF, what it has done recently about its ratio, what it has done since the beginning of the year. It seems to have increased in total since the beginning of the year, and thus you can reach the evaluations of Wall Street analysts on this subject.
The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.
