Category: Daily Instagraph

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

Value Investing as an investment style has been out of favour since the financial crisis in 2008. With the benefit of hindsight this is understandable as central banks artificially kept interest rates ultralow and hereby suspended valuations. In other words, with interest rates close to zero in a discounted cashflow ( DCF ), the value … Continued

The US equity market has dominated the rest of the world over the last 15 years. According to strategists from BofA, 100 USD invested in the US stock market in March 2008 have grown to 288 USD today, while 100 USD invested in Global Stocks ex US stocks are down to USD 98. We note … Continued

Inflation numbers are improving in Europe. Over the last week we had weaker than expected and slowing inflation numbers in Spain and in Germany. Yesterday came a CPI print at 6.7% for December out of France, still high but showing French inflation unexpectedly slowed from a year earlier after record increases of 7.1% in October … Continued

There appears to be some relief in the European energy crisis. This is mainly due to the milder weather we have been experiencing so far this winter. We also witness a silent change in the political mindset as we read for example it becomes more somewhat more acceptable for the German Green Party to slow … Continued

2022 was a true exception from a historical perspective. Only 5 times within the last 100 years the S&P 500 and US Treasury bonds have been falling in tandem. This makes 2022 the worst year for a USD based balanced portfolio with 60% equities and 40% bonds since 1931. According to the headline of the … Continued

There has been an important change in the Land of the Rising Sun, at least from a monetary standpoint. The long-term chairman of the BOJ Kuroda has surprisingly decided to let Japanese yields rise, months before his term ends. We see many consequences of which we highlight three: 1/ The carry trade (borrowing cheap Yen … Continued

Tesla’s market cap has fallen below the market cap of Exxon for the first time since 2020. Investors are worried by the Musk/Twitter saga, slower deliveries and most importantly by the valuation of the growth company Tesla in a higher interest rate environment. The hard numbers: Exxon generated 387 billion USD in revenues and 54 … Continued

There is quietly more trouble brewing amongst US corporates as the financial health of US companies is deteriorating fast. One example: ¼ of companies in the Russell 3000 have become zombie companies. Their percentage is now the highest in 40 years and higher than during the dot-com bubble. These walking dead companies are businesses whose … Continued