Category: Daily Instagraph

The German Producer Price Index fell 1.4% in May, much more than economists had estimated. There are definitely disinflationary forces at work at a time when manufacturing in European economies is slowing. We interpret this an early indication that the interest rate rises over the last months made by the central banks start to bite … Continued

There are still big differences between the US and the Old Continent on how corporates source their financing. This has not materially changed since the financial crisis in 2008. European corporates remain indeed largely dependent on bank financing representing 75% of their loan book. Investment grade bonds are issued by some but high yield bonds … Continued

3 month US Treasuries are now as attractive as US equities and investment grade bonds as all three asset classes currently produce an equivalent yield. Such a situation is unseen, at least since the great financial crisis. In other words, there is no remuneration for the additional risk investors take by investing in bonds ( … Continued

According to Warren Buffett: “Investors should remember that excitement and expenses are their enemies.” For AI, you have the kind of excitement currently that may well end at a heavy cost for some investors. Example NVIDIA: the company is a clear winner of AI but its stock price is now supercharged. The stock is up … Continued

So the Fed paused yesterday following 15 months of interest rate hikes. However, policymakers adjusted the language in their statement, referring to how they would determine “the extent of additional policy firming that may be appropriate,” rather than “the extent to which additional policy firming may be appropriate.” This nuance is important as the Fed … Continued

Long big tech is currently the most crowded trade amongst global institutional investors according to the widely followed BofA Global Fund Manager Survey. It has not escaped to any portfolio manager that most of the performance of the S&P 500 this year was driven by a few big tech names. The irresistible rise of Artificial … Continued

Investors globally continue to pile into money-market funds. Assets under management in these Funds have reached 7.9 tr USD, 10 times the amounts seen in 2007. This is not a surprise as US T-bills yielding 5% or more are considered an attractive investment compared to bank deposits. At these yields, short duration bond funds have … Continued

Financial markets have an busy week ahead with central banks in the US, Europe, China, Japan setting monetary rates. Bond markets are at the current stage pricing in a recession for the biggest developed economies. Yield curves, here measured by the difference between long term and short term bond yields, are indeed solidly negative. If … Continued

The allegory Mr. Market was originally introduced by Benjamin Graham in his 1949 book, the Intelligent Investor, to describe what he believed were the irrational or contradictory traits of the stock market. Mr. Market is what today would be called manic-depressive, with his estimate of the business’s value going from very pessimistic to wildly optimistic. … Continued

Shadow banking is the banking provided by non-banks, like insurers or investments funds, instead of traditional banks. It now represents almost half of the world’s financial assets, double the amount it represented during the financial crisis in 2008. While it is good news to have more sources for banking making hereby the world less dependent … Continued