By root
Today’s graph compares the today’s US government yield curve to the one of the end of 2021. In 14 months, the world has profoundly changed for investors with major implications. First and foremost, there is a risk free rate again giving a nominal yield and providing a juicy alternative to investors who preferred for years … Continued
By root
Inflation has many faces and the overall CPI figures are made up of many different constituents. Since 2000, the biggest increase in US consumer goods and services prices has been hospital services, followed by college tuition, fees and text books. On the other side of the spectrum, prices of TVs, toys, software and cellphone services … Continued
By root
“If we don’t get clear signals that core inflation is going down, we will have to do more,” Belgium central bank chief and European Central Bank Governing Council member Pierre Wunsch told journalists in Brussels yesterday. Core inflation reached an all-time high in the Eurozone in February and currently shows no sign of easing. We … Continued
By root
Time in the stock market is superior to timing the stock market. This graph from Julius Baer impressively demonstrates the power of being a long term investor. Missing out on the 10 best days of the S&P 500 over the past 25 years would have cost the investor half of his return compared to the … Continued
By root
Both French and Spanish inflation figures came in higher than estimated in February and show that the CPI trend is again to the upside in Europe. In France, price increases were driven by an faster growth in food and services. We believe that this will leave the ECB no choice but to continue on their … Continued
By root
6 months T-Bills currently yield approximatively the same than the US aggregate bond market and the US equity market. This raises the question why investors should take the risk of investing in either bonds or equities. For bonds investors are indeed currently not being remunerated on an aggregate basis for duration or credit risk. For … Continued
By root
Global high-grade government and corporate bonds had the best start ever in January with their index up 4%. Investors rushed back into bonds after a dreadful 2022 due to expectations that inflation was peaking and an end of central bank tightening was in sight. In February, bond markets worldwide gave back most of their gains … Continued
By root
The Eurozone economies are expanding again according to the leading indicators. The Purchase Manufacturing Index ( PMI ) published yesterday is in expansion territory ( above 50 ) and rising at the fastest pace since May 2022. This confirms again that Europe is economically more resilient than many sell-side strategists had feared. The energy crisis … Continued
By root
US individual investors have become more bullish on the stock market: the number of bearish respondents to the AAII survey is at a new low since the start of the Ukrainian war. The CNN fear and greed index is also firmly again in greed territory. This positive sentiment can only be explained by fear of … Continued
By root
European stocks trade at 12.7 forward earnings, which is below their long term average and still at a 31% discount to the US market trading at a forward P/E of 18.4, the top of its historical range. The current result season is also showing us that European corporate world is doing better than some top-down … Continued