Category: Daily Instagraph

Ryan Lemand recently highlighted a useful lesson from the Nasdaq collapse of 2000–2002. The index ultimately fell around 78%, but the journey down included rallies of approximately +35%, +12%, +25%, +41% and +45%. Each rebound could have looked like the bottom. Each one gave investors, conditioned by the preceding bull market to “buy the dip”, … Continued

In just 118 days, Kevin Warsh has already profoundly changed interest-rate expectations. The chart shows how, since he took office in May and following Jackson Hole, markets have gradually priced in a significantly more restrictive monetary path. Yesterday’s Fed decision confirmed this shift in regime. More important than the decision itself was the message: the … Continued

The US is approaching a sizeable debt wall. As the chart shows, a very large amount of Treasury debt matures over the coming years, with 2026 particularly heavy because of the huge stock of short-term bills. The issue is not repayment capacity, but refinancing cost. Debt issued when rates were much lower is progressively being … Continued

Credit markets are sending an interesting signal. Historically, 5-year CDS spreads for technology companies and banks moved broadly together. A CDS spread is simply the annual premium investors pay to insure against a company’s default: the wider the spread, the higher the perceived credit risk. That relationship has now broken. Bank CDS remain relatively calm … Continued

Partners Group is a good example of where a difficult cycle can create an interesting opportunity. The shares are down around one-third YTD and around 60% from their 2021 all-time high, while the company has also announced a CEO transition at year-end. The backdrop remains challenging: a more difficult exit environment, lower performance fees and … Continued

We are not out of the woods yet. Brent is back above $100 a barrel as renewed US-Iran hostilities have brought the risk of further disruptions through the Strait of Hormuz back to the forefront. Oil remains below its April peak, but the renewed escalation shows how quickly the energy risk premium can return. The … Continued

The chart below is quite remarkable. U.S. Treasuries with maturities of 15 years and more are now showing a 10-year rolling nominal total return of around -2% — the worst outcome on record going back to 1793. Our decision at ECP to keep bond duration short over recent years therefore appears to have been the … Continued

The Daily Instagraph is back after the holidays. The valuation case for European equities has become less straightforward. The STOXX Europe 600 is now trading at around 14.8x forward earnings, compared with a 20-year average of 13.4x. Europe still trades at a discount to the US, but this discount has narrowed materially after the strong … Continued

Jan David Meyer, CFA, recently put today’s bull market into a useful historical perspective. Since 1900, S&P 500 bull markets have lasted around four years on average and delivered gains of roughly 135%. At 3.8 years and close to +110%, the current bull market is therefore approaching its historical average duration. Does that mean the … Continued

With the geopolitical situation still highly uncertain and free passage through the Strait of Hormuz yet to be restored, oil continues to trade around USD 90 per barrel—well below its April peak of USD 120. Yet looking at crude oil alone understates the severity of the energy crisis for two reasons. First, inventories are being … Continued