Category: Daily Instagraph

European stocks remains at a substantial discount to the US in terms of forward Price/Earnings ratio. The discount goes through all sectors: it is the least pronounced in IT and the most pronounced in energy. To us, this hardly makes sense as these 2 sectors are by nature global where companies compete worldwide. While US … Continued

Make no mistake: the yearly sabre rattling in US Congress about the debt ceiling is not the biggest problem and will eventually be resolved. The real issue is the absolute level of US national debt: 31.4 trillion USD and growing! In the long run, this is not sustainable and a substantial burden to the coming … Continued

The outlook for European banks is improving due to a combination of higher interest rates ( hence higher net interest income for the banks ) and lower provisions. As the energy crisis is fading for the moment, fears of an imminent deep recession are also abating. Today’s graph illustrates the mechanics bringing the estimated return … Continued

We want to make the point again that the valuation opportunities in equities currently lie outside of the US. While we showed Price/Earnings and cyclically adjusted Price/Earnings in the past to demonstrate this, today we show Price/Book. On this measure, Rest-of-the-World equities ( including mainly Europe and Japan ) are at their biggest discount to … Continued

Looking at the European gas storage levels from the moon, you would not guess there is a war in Ukraine triggering a severe energy crisis in Europe. Now we have a beneficial combination of a lower than expected supply shock and less demand for heating due a mild winter. The result: Gas storage levels in … Continued

According to the historian Adam Tooze, a polycrisis in economics refers to “not just a situation where you face multiple crises, [but] a situation…where the whole is even more dangerous than the sum of the parts”. Strategists from Credit Suisse believe we could be currently facing exactly such a situation with the weaponization of four … Continued

The industrial metal copper is often referred to as Dr Copper as its price has been historically a good indication of overall economic health. The body temperature of global business activity is on the rise again with a 25% increase of the price of copper over the last 6 months. The reopening of China after … Continued

Swedish telco equipment maker Ericsson announced yesterday a provision of SEK 2.3bn in Q4 in relation to a potential resolution with the US Department of Justice of a breach situation in a case of payments to the Islamic State in Iraq. Stock price was up 6% as the provisions indicates a deal is close and … Continued

As interest rates have been increasing, valuations of the US equity market do not look particularly attractive compared to US government bonds. The normalized US earnings yield ( inverse of the price to earnings ratio ) is now slightly lower than the bond yield on US 10 year government bonds. This is a sign that … Continued

The current global monetary tightening is expected to be the strongest since the early 1980s as measured by the G7 weighted policy rate (source: FT,Worldbank). The cost of credit has substantially increased, especially for the weaker borrowers. It has also resulted in the end of free money as zero or negative yielding debt has disappeared. … Continued