Category: Daily Instagraph

Morgan Stanley summarizes the key risks facing the Chinese economy as the 3Ds – demographics, deflation and debt. A lot has been written about Chinese demographics being the result of State policies. The current economic data coming out of China is not reassuring while debt levels are unsustainably high. We draw three conclusions: 1/ Chinese … Continued

The latest BofA Global Fund Manager Survey gives us a clear indication most institutional investors believe inflation has peaked. In such a scenario, being long 10 or even 30 year Treasuries makes sense and appears to become an overcrowded trade. While we believe the odds are high inflation has indeed reached a high, we would … Continued

Below the surface, there is still value in the US stock market as a good part of the high multiples are explained by technology and particularly AI-related stocks. Nasdaq currently trades at 31.1 times forward earnings, which is close to the highs of the peak of the Internet bubble. The top 12 AI-related stocks currently … Continued

The holding company of the Agnelli family, Exor, has taken last week a 15% stake in the Dutch healthcare company Philips worth 2.6 bn EUR. Exor had announced before planning to expand its healthcare portfolio and Philips is definitely a long term investment opportunity. The stock is down 60% since the announcement of the recall … Continued

Yesterday’s US inflation numbers were weaker than expected with core CPI ( excluding food & energy ) rising 0.2% for a second month in a row, the smallest back-to-back gains in 2 years. While all this is certainly positive, we believe it is too early to cry victory as inflation can come back with a … Continued

When looking at the evolution of the cost of housing in the US over the last 50 years, we draw 2 conclusions. Firstly, the costs of renting have increased almost 10 fold in nominal terms since the 70’s and, secondly, the cost of buying has decoupled completely from the cost of renting over the last … Continued

As commented in previous daily’s, only 11% of the US household debt is currently on variable interest rates. Hence the US consumer is not yet very sensitive to higher interest rates. Not yet: there is indeed substantial pain ahead looking at interest rates for example on new credit card loans, personal loans and car loans. … Continued

The oil price has made a comeback and is up 24% since its 2023 lows during Mid-March. This should not come as a surprise as world economies prove resilient with sustained demand despite the rate hikes by central banks. Production cuts by the biggest suppliers like Saudi Arabia limit supply. There is currently no buffer … Continued

Bill Ackman from Pershing Square announced to short the 30-Year US Treasury in size as he expects yields to hit 5.5% as structural changes will lead to higher levels of long-term inflation. These would include de-globalization, higher defence costs, the energy transition, growing entitlements, and the greater bargaining power of workers. He thinks it would … Continued

The 10 year US government bond yield is back to 4.1%, up from 3.3% at the beginning of April. The surprise rating downgrade by Fitch of the US Sovereign Bond Rating to AA+ from AAA is hitting investor sentiment further as Fitch mentions as reason for the downgrade: “the expected fiscal deterioration over the next … Continued