The markets today

The general tone seems to be risk on: steeping yield curve, miners down, gold flat, equities up. No very dramatic moves, although SPX is very close to breaching its high for the year, which was (surely) its all time high. Even European bank stocks are rallying, in spite of a 12% decline in European GDP. Is a failing economy good news for banks who have lent to businesses out there?

A story caught my eye: GM plans to roll out a charging network of its own. With a 2022 forecast P/E of 4.4x, I think GM looks better value than TSLA from my point of view. GM owns Cruise which is a serious player in the autonomous driving space. If markets can’t stay down (because … Fed), it seems logical to go long promising companies.

Chinese equities are down a bit, because of the fuss over TikTok. It’s about to be bought by Microsoft, because it’s currently Chinese owned. The ban is a piece of signalling in my view. $BABA (Alibaba) is up, though. I guess US investors are relaxed about being long a stock that has the Chinese politburo standing behind it. Still.

From Wolf Richer

Severe stress in US rental market. There is something very odd going on in the US real estate market according to Kevin Erdmann. Home ownership, as a proportion of all properties, has shot up 2.6%. Something is very fishy: Erdmann doesn’t seem to be able to explain this, which means that I don’t have a hope. Somehow, I feel that it would have more to do with rental properties disappearing, or being put up for sale for owner occupation, than to do with buyers suddenly having lots of money to move out of rental accommodation.

Cars are lasting longer. I’ve suspected this for a while, just through casual observation of what’s around me as I travel around. The article is about the US, but the same effect must be playing out here. And people are driving less. This has to be good for drivers and for everyone else. The terrible planning system we have in the UK might just be saved by workers not needing to be in the centre of London, whose world-beating productivity was probably never about it’s location but more about the fact that most of the best graduates end up working for firms based there after university.

Close of play

I haven’t bothered to check, but from Twitter I gather that the NDX has powered ahead yet again. The Fed balance sheet grew more than expected, which might not be unrelated. Mondays always seem to be risk on, but generally risk appetite deflates through the rest of the week. We shall see if this week is any different.