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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
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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
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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
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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
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The Fed increased interest rates by 50 bps yesterday, slowing down from its previous string of 75 bps raises. At the press conference after the announcement of the decision, Powell stated “we still have some way to do” and we will “stay the course until the job is done”. We believe investors should not underestimate … Continued