Post Tagged with: "equities"

More on why Trump’s woes aren’t driving markets

More on why Trump’s woes aren’t driving markets

This is a brief follow-up on the last post I wrote about how markets aren’t freaking out about the Trump scandals. I wrote that “this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.” And we see that this is true today.

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Markets actually aren’t freaking out about Trump

Markets actually aren’t freaking out about Trump

We are seeing decent selling in today’s US equity markets, with the VIX up some 25%. And most people are pointing to the Trump scandals. But this is only one day. What is happening with Trump – while negative – will not change the arc of the US economy and markets.

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Trump’s abuse of power and monetary offset

Trump’s abuse of power and monetary offset

Here in Washington, the city is abuzz over the crisis engulfing the Trump Administration. But politics are less important to markets than one might expect, despite markets being forward-looking. That’s because it’s often hard to judge what impact the politics will have on interest rates and profits. The negative impact of Trump on the US dollar is palpable, but I […]

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The divergence in equity and credit markets

The divergence in equity and credit markets

This chart speaks volumes about the Trump rally.

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A few comments on the end of secular stagnation

The failure of Japan’s grand monetary policy experiment to meet expectations is a warning sign we all should heed. But right now fears of so-called secular stagnation have receded as the global economy has roared back to life. We should not dismiss the threat of secular stagnation so easily. Here’s why.

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The EU as a larger Germany post-Brexit and Hugh Hendry’s Eclectica Fund commentary

The EU as a larger Germany post-Brexit and Hugh Hendry’s Eclectica Fund commentary

Stocks have mostly recovered since Brexit and the strong dollar and Yen have reversed much of their overvaluation in recent days. The question remains as to what the fallout from the UK’s departure from the EU will be. I continue to believe the near-term economic impact will be muted, and that Brexit will come to be seen as mostly a political event. But it is a political event with wide-reaching potential ramifications.

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Jensen: How long bonds could actually outperform equities

Jensen: How long bonds could actually outperform equities

The equity markets that have fallen the least so far are the U.S. and the Japanese markets. If my prediction that we are looking into a more difficult period in the U.S. (and the euro zone), U.S. equities look particularly vulnerable, so maybe Jeremy Grantham will be proven right after all. If you add to that the rather lofty earnings expectations for next year in the U.S. (chart 10), the situation only gets trickier.

Despite not exactly being dirt cheap at current valuation levels, I am therefore going to stick my neck out and suggest that long bonds could actually prove a better investment than equities – at least until we approach the bottom of this economic cycle.

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Boehner departure means government shutdown more likely, default a possibility

John Boehner is not conservative enough. At least that’s what the firebrand Republicans in the US House of Representatives believe. And so he has resigned from his position as Speaker of the House and will resign Congress altogether as well. Boehner has been more eager to compromise and reach a grand bargain. With his removal from office, it opens the […]

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The Chinese currency devaluation is now a crisis

The Chinese currency devaluation is now a crisis

After hard selling into Friday’s close in the U.S. and a global selloff in stocks today, it is clear that the Chinese mini-devaluation has begun a crisis, despite the Yuan appreciating for a seventh day. The mini-devaluation is merely a catalyst for a long overdue correction, But three questions remain. First, will the capital flows out of China force China to let the Yuan slip again? Second, will the downdraft in emerging market and commodity-heavy economies like Canada infect Europe and the United States? And, third will the US Federal Reserve resist rate hikes in the wake of the turmoil? My thoughts on those issues are below.

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China’s stock markets and revisiting 2011 predictions

By Michael Pettis originally written on 31 Jul 2015 I plan to post a new entry very soon but before doing so I wanted to say a few things about the stock markets, which continue to be insane (but not unexpectedly so) and then repost a blog entry that is nearly five years old. By the time I published my […]

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Bearish signals: Yield curve flattens, spreads widen, China devalues as Fed prepares hikes

Bearish signals: Yield curve flattens, spreads widen, China devalues as Fed prepares hikes

Yesterday I mentioned markers of economic and financial weakness that I believe show cracks in the facade of benign economic data out of the US and Europe. Today I want to briefly go through a few of these data points and highlight what they could mean in the context of a cyclical bull market in equities and broad-based growth in the developed economies.

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How to dress for a rainy day (of low nominal investing returns)

How to dress for a rainy day (of low nominal investing returns)

A typical portfolio will almost certainly not deliver the required returns over the next decade. If ‘typical’ means a 60/40 approach, as already mentioned, then 2-4% annualised returns are what can realistically be expected. If ‘typical’ means an entry into alternative investment strategies but only mainstream alternatives such as equity long/short and nothing else, you will almost certainly also end up short of your own expectations.

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