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The gold price has historically been inversely correlated to real interest rates, namely inflation adjusted interest rates. The reason: in periods of ramping inflation and low interest rates, gold is a safe haven to protect against loss of purchasing power. The problem: the textbook relationship has completely broken down over the last 2 years as … Continued
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On the surface, the Chinese GDP numbers for Q1 climbed 5.3% in the period, accelerating slightly from the previous quarter and beating estimates. However the bounce came in the first two months of the year. In March, growth in retail sales slumped and industrial output decelerated. This confirms our belief that the Chinese economy is … Continued
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The attack by Iran on Israel over the weekend shows once again to what extend the Middle East is currently on fire and that geopolitical risks can no longer be ignored by investors. We read on Bloomberg this morning that “for the moment crude is little changed amid speculation that the conflict will remain contained”. … Continued
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The so-called magnificent 7 stocks ( Apple, Amazon, Google, Meta, Microsoft, NVIDIA and Tesla ) represent more than 25% of market cap of the S&P 500. Passive investors wrongly believe that by buying the index they buy a diversified basket of stocks. As we recently saw with Tesla ( stock down 30% y-t-d ) these … Continued
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The hotter-than-expected inflation data in the US sent a shockwave through the bond markets with the 10 year Treasury above 4.5% this morning, up from 3.9% at the beginning of the year. We maintain our view that central banks have arrived towards the end of their rate hiking cycle. However, as we expected, the speed … Continued
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One of the most followed leading economic indicators is the Manufacturing PMI, an index measuring the month-over-month change in economic activity within the manufacturing sector, the most cyclical part of the economy. Here Spring appears to be coming with the global, US and Chinese PMI’s increasing and now in expansion territory (above 50). This is … Continued
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Imagine you had invested 100 USD in 1988 in the US stock market. By attempting to outsmart Mr Market and based on your true market insight, you completely exited the market at certain points. Imagine you got it completely wrong: the cost of missing the best day, the best week, the best month, the best … Continued
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Another one of the 6 investment themes we put forward in our Q2 house view is that valuations globally are high with however some under-valuated pockets in selective sectors and geographies. A good example of a region fallen totally into disgrace with investors is Europe. Since the financial crisis, never has the valuation discount of … Continued
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At least two of our 6 investment themes we provided at the beginning of the year will also make it in our Q2 house view. One prediction in December 2023 was a slowing economic growth but no hard recession. 3 months later, economic data around the world remains stronger than most economists had foreseen as … Continued
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CAPE, the cyclically adjusted price-to-earnings ratio, remains a good valuation measure as it smoothes the earnings of the companies over the business cycle (10 years). On this measure, valuation of the US equity market is back to its peak reached after the financial crisis and almost as high as it was during the Internet bubble. … Continued