Category: DAILY INSTAGRAPH

The old saying goes: “You do not buy insurance when your house is on fire.”. Investors currently judge the risk of a market correction as very low, at least when looking at the derivatives market. The current cost of insurance of a 3 months 95% S&P 500 put stands currently at 0.82 bps, the lowest … Continued

We have been expressing in our quarterly house view our belief that we would not see a ‘hard landing’ of the US economy at the current stage. It is a fluid situation where things can evolve quickly. However, in a presidential election year, the US economy continues to surprise to the upside as shown by … Continued

The German Wirtschaftswunder has lost some of its shine, and this already before the Ukraine conflict. This can be seen in the drop of industrial production that is back to 2012 levels. We see different reasons: 1/ an economy overly reliant on its car industry that has missed out on the EV trend 2/ the … Continued

We have been arguing earlier this year in our house view that expectations going into 2024 for rate cuts were high. We believed there was a divergence between central banks and markets expectation over the number and pace of rate cuts in 2024. In the meantime, market have started to adjust. The yield on the … Continued

Imagine you had a mandate to invest the modest sum of 5.8 trillion USD into a maximum of 2 positions. 2 options: You can either take over Apple and Microsoft or take over the whole of Japan Inc and keep 1.5 trillion USD in cash to pursue other activities. Indeed, Apple and Microsoft combined are … Continued

Valuation matters, at least it has always in the past. According to the work of Yale professor Shiller, there is indeed a strong correlation between the attractiveness of equities relative to bonds and their subsequent 10 year return. The attractiveness of equities is measured here by normalised 10 year earnings yield minus the 10 year … Continued

The hawkish policy by the Fed, the higher rates and the US regional banking crisis last year in the US took their toll on bank credit. It is only the second time over the last 50 years that total bank credit in the US is contracting. Credit contraction will act as an economic brake and … Continued

Chinese stocks have now fallen to 5 years low based on the 3 major market indices measuring their performance. Judged in dollar terms the Chinese GDP has started to decline for the first time over the last 30 years. A disappointing recovery post-Covid, overleverage leading to a property crisis, government interference in the private sector … Continued

Since the financial crisis in 2008, small cap value stocks outside of the US have underperformed large cap US growth stocks by a stunning 80%. If the bursting of the Internet bubble and the subsequent rally of value is any guide, this will eventually change, creating a substantial investment opportunity for patient investors who can … Continued

The recent Red Sea after attacks by Houthi rebels are in geopolitics what Donald Rumsfeld, Secretary of Defence under the Ford and Bush junior administrations, famously called the “unknown unknowns”. The Suez canal handles about 12% of global trade. Rerouting shipments around the Cape of Good Hope adds about 3,000-3,500 nautical miles (6,000km) to journeys … Continued