Thought of the day

Prof. Plum, AKA Michael Green has been going on for a while what a game changer indexing has become. Diversification becomes less effective, because everyone holds the same five names (yeah, the FAANGMAN lot). To not join the crowd means that you are short Apple. It …

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US demographics are bad but still way better than China, Germany or Japan.

The world is running out of people. At least, it’s running out of people of working age. Labour and capital are complementary factors of production. A collapse in labour supply will depress demand for capital, and …

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The Hairy Caterpillar

The market has priced in seven 25-bps hikes this year and two more next year. #Fed tightening is in everyone's mind.

I though reminding people of what we used to call the “hairy caterpillar” chart might be useful: The market has a poor record of predicting …

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It’s a long way down from here

16/ I think there's a good chance something else is going on. As depicted in the below chart, the trend for average 30-year equity valuations has increased substantially since 1990. Notably, that basically coincides with the explosion of computers/internet.

h …

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Friday 6, May 2022

Wrap

This was a risk-off day. Equity markets were pummelled. It was Europe’s turn today. Generally, FX and commodities were not too seriously affected. The 10Y yield on USTs crept up to 3.09%.

Hospital errors

I thought that this was interesting. It’s about …

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Thursday 5, May 2022

SPX sinks

The SP 500 sank over three percent today. Bonds sank. The 50bp hike from the Fed seems to be weighing on sentiment.

The Fed might yet have cracked risk asset markets. 10Y yield is now back up, now at 3.07%.

Tweet

In 2014 …

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Wednesday 4, May 2022

Wrap

Basically, the Fed bumped rates by 50bp, entirely as expected. The rumours on Twitter of a 75bp hike proved unfounded, but had the desired effect of causing the equity market to stage a relief rally, SPX up 2.36%.

Bonds were less impressed, with short …

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Tuesday 3, May 2022

Wrap

Generally, equities were up, modestly, bonds were flat (10Y yield precisely so, safely back under 3%), FX pretty quiet, DXY falling back from 103. Most big stocks seem to be up, including Tesla, XOM and JPM.

The bond bulls, such as @macroalf, and Andreas Steno-Larsen …

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Monday 2, May 2022

It was a public holiday in the UK today, and I think across much of the developed world. US markets appeared to be open, but I didn’t check the volumes.

Stocks bounced back, but only after a very volatile trading day. The FANG+ gang did …

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Friday 29, April 2022

Is Bill Hwang a dope?

Bill Hwang has been arrested. He managed to leverage up positions in half a dozen big US stocks to around $35bn gross exposure. That’s a lot. He ended up owning well over half of ViacomCBS, a big US broadcaster, with …

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