Category: Daily Instagraph

Agricultural commodity prices have more than doubled since the COVID crisis, reaching record highs this year. As David Costa of Crescat Capital aptly notes, rising agricultural prices have historically been a precursor to broader commodity inflation. If this trend continues, inflation could resurge unexpectedly. Despite recent improvements in inflation data and interest rate cuts, investors … Continued

Investors remain sceptical about the political landscape in France under the Barnier government, particularly regarding the sustainability of its public finances. Although France’s net debt-to-GDP ratio (110.8%) is indeed lower than Greece’s (159.8%), it faced a far larger public deficit in 2023 (-5.5% compared to Greece’s -1.6%). In a remarkable development, the yield on Greece’s … Continued

Since 2009, the US equity market has outperformed its European counterpart by nearly 300%, shaping the perspective of a whole generation of younger portfolio managers who have only known European stocks as persistent underperformers. There are valid reasons for the US to lead, as we’ve discussed many times before. Today, the US equity market’s dominance … Continued

This is the latest back-to-school valuation update. From our perspective, there is little change compared to 12 months ago. The US, led by its megatech giants, is trading at 21.4 times its 12-month forward earnings, significantly higher than its 20-year average and placing it in the top 10% of valuations over the past two decades. … Continued

Germany has de facto lost its status as leading industrial power: industrial production in real terms is now 26% below the long term trend. Overreliance on cheap Russian gas, a premature shift to green energy with the exit from nuclear, relocation of industrial production to Eastern Europe, overreliance on Chinese exports, lack of innovation, excessive … Continued

Europe faces a growing competitiveness problem, lagging behind the United States and China economically. Structural challenges such as over-regulation, a lack of innovation and entrepreneurship, high taxes, and fragmented national political agendas are causing European companies to fall even further behind in terms of profitability. For example, Germany’s automotive industry is in a state of … Continued

Yesterday’s 50 basis point rate cut by the Federal Reserve serves as a reminder of the central bank’s dual mandate, unlike the ECB’s singular focus on inflation. The Fed is tasked with managing both inflation and employment, and it was likely concerns over the latter that prompted a more aggressive cut than most analysts expected. … Continued

Yesterday, we discussed how equity markets have historically delivered strong performance in the 12 months following the Fed’s first rate cut—except in cases of recession. As one of my colleagues from the PM team, Benedikt Palmason, aptly noted, central banks lower rates for a reason. A rate cut typically signals slowing economic growth and mounting … Continued

It seems the key question is no longer whether the Fed will cut interest rates this Wednesday, but by how much—either 25 or 50 basis points. Historically, the U.S. stock market has responded positively to the first rate cut, often posting double-digit gains in the following 12 months. However, there are two notable exceptions: 2001 … Continued

During my holidays in California, I had the chance not only to watch the Presidential debate firsthand but also to closely follow the commentary from various U.S. media outlets, each aligned with different political perspectives. While it was evident that Harris delivered a solid performance and Trump had his weaker moments—including the now-infamous “dog and … Continued