Category: Daily Instagraph

Commodities have now reached a 50 year low against overall equity markets. We can think of many arguments on why this will change as demand for commodities should remain sustained once economic uncertainties become less and will for sure be fuelled by the transition to cleaner energy. Also some equity valuations remain high in a … Continued

A lot was written in the past about the concentration of the US markets on a limited number of FAANG stocks. In Europe, the situation is somewhat comparable except that it is not on tech but on luxury goods producers. The market cap of LVMH alone is now higher than the ones of Mexico and … Continued

The US corporate bond spreads, i.e. the difference between the aggregate yield of US corporate bonds and the Fed Funds rate, is currently negative. This may not be surprising as the Fed Funds Rate was increased to the 5-5.25% range yesterday. It however implies that, on aggregate level, the US corporate bond investor is not … Continued

As expected, the Fed rose its funds rate by another 25 basis points to 5-5.25% yesterday. Noticeably it withdrew in its statement from its previous predictions that further rate hikes would follow. It now increasingly looks like the smaller US banks are the first collateral damage of the higher interest rates. Pacific Western announced yesterday … Continued

Another day, another sell-off in US regional banks. Yesterday PacWest Bancorp and Western Alliance Bancorp led a selloff of the regional bank index, falling 28% and 15% respectively. So JPMorgan Chase & Co.’s purchase of First Republic announced over the weekend did not reassure investors this crisis is coming to an end. To us, the … Continued

European equity markets remain cheap. In terms of cyclically adjusted price earnings ratio, CAPE, Today, Europe traded at the end of March at 20.4x versus 28.2x in the US. This means Europe’s CAPE valuation today is 28% below the US, a discount nearly double the 15% historical average discount since 1981. Historically, such high discounts … Continued

The market-implied Fed rate 18 months is currently 1.8% lower than the current Fed rate. Hence bond investors believe that a/ peak rates are behind us and b/ the Fed will be forced to cut rates aggressively. The gap between market implied rates 1 ½ years from now and current rates has not ever been … Continued

With the publication of robust earnings from tech bellwethers Microsoft and Alphabet yesterday, the result season appears to progress pretty much according to expectations so far. Consensus believes S&P 500 earnings will be down some 6% during the quarter. In terms of valuation, US tech does not look particularly attractive compared to the market and … Continued

The San Francisco based regional lender First Republic announced after the close of the US market yesterday its results: customer deposits have plunged 41% to $104.5 billion in Q1, worse than estimated and despite the fact the US largest banks had thrown in a lifeline by parking 30 bn USD in additional liquidity at the … Continued

‘In God we trust’ it states on the rear of the one USD note. Well, investors appear to loose some of their trust in the USD. The spread of the 3 months T-bill against the 1 month is shooting up above 1.5%. Investors are indeed worried about renewed trouble brewing over the coming months in … Continued