Monday 23, May 2022

Chart of doom

For some reason, the cult of equities is still alive, even though it should long ago have departed the scene.

Anyway, we are finally seeing some flows out of equity passive funds. I am not quite sure what a “Financials ETF Flow” is …

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Friday 20, May 2022

I was too busy today to make a regular post, so I just noted a few interesting things I read recently.

Things I’ve read

• Who’s driving the crypto bus? Brent Donnelly points out that there are tight correlations across seemingly unrelated markets, but that …

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Covid hangover

The policy response to Covid was unprecedented. As pandemics go, it was relatively benign, but the fiscal response was off the scale. It seems likely that the reversal of some of these measures will kill growth (or, to be charitable, reveal that the recent spike in growth has …

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Monday 16 May

The dollar

I always think of a price as a ratio. The ratio between the value of the thing (a house, an hour of work, an Amazon share), and the value of the currency in which it is denominated. The dollar has been on a tear recently …

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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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