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Reflection of the day
2022.08.11
“It's so hard to predict which direction this market and economy are going in, but it seems clear that the Fed may (most surely) keep rising rates , the equity market may remain volatile, corporate earnings are looking wobbly at best, and we may or may not be entering a recession"
2022.08.01
2022.06.24
TINA (there is no alternative) has been a catchy and accurate shorthand to describe the prevailing investment philosophy over much of the last decade — the idea that ultra-low rates have pushed yield-starved investors into riskier assets, such as stocks. But there’s a new woman’s name to get acquainted with.
“We call it PATTY — pay attention to the yield,” RiverFront Investment Group global fixed income CIO Kevin Nicholson said in a Bloomberg Television interview this week.
“As fixed-income yields have gone up, that has lead us to start to look at fixed-income a little bit more.”
2022.06.22
It´s not a sentence , it is more:
2022.04.14
What is a bank? It is something that raises money (from depositors, other lenders, and shareholders) and lends that money to someone else, in return for interest. Despite all the fancy stuff It does, this is still its nature. And the basic measure of how well it is fulfilling this nature is how much net interest income it is collecting, and how big the spread is between what it pays for its funding and what it earns from its lending. So look for that result before investing in it.
2022.04.04
Market consensus calls for the economy slowing through the end of next year, but not falling into a recession. This makes sense, in a broad way. The economy is roaring, as evidenced by the labour market. It would be odd to bet on a recession, even a couple of years from now, when unemployment is running at 3.6 per cent. At the same time, CPI inflation is almost 8 per cent, and showing no signs of subsiding. The Fed is embarking on a tightening cycle and indulging in Volckerian rhetoric. That sort of thing often ends in recession.
So we might state the consensus view as “everything is cool, unless inflation gets worse, in which case the Fed tightens us into a recession, which will not be cool”.
2022.03.11
"As investment professionals, we’re trained to study all the data and put together this beautiful plan of exactly what to do.
And we’ve got this giant elephant in the room that we can’t quantify."
2022.03.08
Dollar dominance in doubt? The decline of the US currency is being considered as 4 Russian banks announced plans to adhere to Union Pay, China’s biggest card network . But will this undermine USD dominance?
We doubt it. China’s biggest disadvantage is its lack of independent courts and an autonomous central bank. These, alongside Beijing’s capital controls and the dollar’s usefulness as a funding currency, create a durable advantage for the dollar. For most global investors, the alternatives are worse. Sanctions don’t much change that.
2022.02.28
From an investment strategy point of view, economic uncertainty is increasing, with the risks around inflation higher, and the risks for growth downward. This tends to suggest a downward bias for equity valuations.
2022.02.06
Bulls will think that any upward shift in bond yields and interest rates will be temporary because inflation will eventually subside. It will be possible to ride out any short-term turbulence. But the bears will believe that it will be impossible for the Fed to control inflation without inflicting some serious damage on the economy and the markets.
2022.01.27
"The Fed is walking into a political sxxxstorm as price pressures are continuing to affect everybody. This political hurricane the Fed is facing is something that it had not to contend with for quite some time - regardless what Wall Street thinks and wants. "
2022.01.25
"How much risk are you taking on, and how much reward are you expecting to acquire? Keep asking yourself that question.
Better to be out of the market wishing you were in, rather than being in the market wishing you were out.”
2022.01.10
BlackRock's chief investment officer of global fixed income Rick Rieder:
"And even though we may not yet be there, attaining something close to the Fed’s definition of maximum employment is now within our sights, and the mitigation of the latest COVID wave and improvement in labor supply should in time get us there. Still, none of these factors obscure the fact that the Fed continues to run behind the curve on policy normalization, and one of the more significant questions for markets over the next couple months will be how quickly, and precisely how, policy makers decide to catch up to conditions. Unfortunately, waiting to act has placed the Fed in an awkward position, where policy normalization now may appear a bit clumsy and difficult for markets to interpret, so watch for greater volatility as this process unfolds."
2022.01.05
Is Tina enough? (acronym for “there is no alternative”)
This is the big one question of 2022. Why shouldn’t stocks at all-time highs, in price and valuation, worry us? Because There Is No Alternative: the earnings yields on stocks are still well higher than fixed income yields. There are serious theoretical questions about this argument (shouldn’t low yields indicate lower economic growth, thus lower future profits and lower stock prices today?) but its psychological power and popularity are indisputable. Even if inflation doesn’t drive interest rates up, something else could upend the cult of Tina. A correction would follow.
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