Post Tagged with: "investing"

Overbought

Overbought

“I had to cover my shorts.” That’s what my friend Matt told me after the company came out with its quarterly earnings and issued upbeat projections. I asked Matt, “how long are you going to keep shorting these companies. This is like the 10th time you’ve been forced to cover.” I don’t remember anymore how Matt responded. But I do […]

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Policy divergence revisited

Policy divergence revisited

Three years ago, the Fed had begun tightening and all other central banks were still on easy street. Now, we are at an inflection point where other central banks are likely to tighten more than the Fed. That’s negative for the US dollar and positive for longer duration US Treasuries.

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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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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 Trump Rally is over

The Trump Rally is over

A lot of people are saying the rally in shares since early November that took the Dow over 20,000 is exhausted. That may be the case. However, short of a 1987-style crash, we’re going to have see a recession before shares retreat dramatically from present levels. And the data don’t support the thesis that a recession is coming anytime soon. Instead, we are now seeing a re-acceleration of growth from a mid-cycle slowdown. And that is supportive of shares.

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Black Swan Investing and the breakup of Europe

This isn’t going to be a thematic post on how to profit from Europe’s breakup, despite the sinister title. Instead, it’s a potpourri post – a mashup of different ideas I have right now and want to run by you to organize my thinking about them. I used to do this a lot more in the past – and I found it useful; I hope you did too. So for lack of a coherent theme, I chose the title above. Here goes.

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A short squeeze in government bonds?

A short squeeze in government bonds?

This summer – when stock markets across the globe began to rally after their post-Brexit collapse, bond markets put in a top. US 10-year yields bottomed at 1.35% on July 8th. And in the time since, they have zoomed to over 2.5%. In short, while stock markets have rewarded investors, bond investors have taken a beating. What’s happening here?

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Demographics are driving wages lower, which is negative for investment returns

Demographics are driving wages lower, which is negative for investment returns

For managers of money, the post-crisis low growth world has had major implications for asset allocation strategies. Assumptions about returns are greatly affected by the both monetary easing used to counteract the slowing and the yield curve flattening indicative of that easing’s ineffectiveness. Recent research on demographic trends and wage growth suggest trends now in place may continue, with grave implications on returns.

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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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Signals of slowing

Today’s post is going to be a bit of a hodge podge because I didn’t have a single theme to report on as I started out. If I had to give this post a title, the overarching theme would be “signals of slowing”. What I am seeing is nothing to be alarmed about per se. However, we should be cognizant […]

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Asset allocation in a period of wealth mean reversion

Asset allocation in a period of wealth mean reversion

Mean Reversion of Wealth is one of the six structural mega-trends that we have identified. As is pretty obvious when looking at chart 2, wealth creation during the great bull market of 1981-2000 was quite extraordinary and, in our opinion, unlikely to be repeated anytime soon. Wealth simply cannot outgrow GDP indefinitely, as it has done in most years since the early 1980s. It is only a question of time before mean reversion kicks in.

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