Category: Daily Instagraph

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

Based on data going back 100 years, the S&P 500 has NEVER bottomed in the period before a recession hit. Unfortunately, we can think of many arguments supporting a scenario of a soft or hard recession hitting the US economy in the mid-term: higher interest rates due to tight monetary policy with risk of policy … Continued

According to the BofA Global Fund Manager Survey, fund managers are currently underweighting equities compared to bonds to the highest extent since the financial crisis. This is not surprising as bonds have become more attractive due to the rising yields compared to a stock market that still looks highly valued for the broader market, especially … Continued

As Bloomberg columnist John Authers points out in his latest column, China is currently showing the most positive economic surprises since the financial crisis. China published GDP figures for Q1 with growth of 4.5%, not only above consensus but with retail sales topping 10%. The rebalancing from fixed assets investments to services and the consumer … Continued

In terms of valuation, the UK stock market has seen a downward spiral since Brexit in 2016. This is not a surprise as exiting the EU and the political turmoil that followed came at a substantial economic cost for the United Kingdom. It lost some of its appeal as international capital market as investors shied … Continued