“In fact, flows have remained strongly positive into equities throughout the sell-off. As the chart shows, ARK Innovation ETF has suffered no net redemptions despite declining 71% in price since the peak. The ‘buy the dip’ mentality is alive and well.“
For the first time in a decade, the majority of fixed income assets yield 4% or above.
NB “The bars show market capitalization weights of assets with an average annual yield over 4% in a select universe that represents about 70% of the Bloomberg Mulitiverse Bond Index.”
“Buying conditions for cars, houses, and large durable goods fell to multi-decade lows in June, according to the University of Michigan survey, meaning the vast majority of respondents believe it’s a bad time to buy the above“.
Consumer sentiment about the economy is also at a 40-year low. Interestingly, Oaktree make the point that the magnitude of decline could be skewed by political bias.
“For context, in June 1980, the difference between sentiment figures for self-identified Democrats and Republicans was 4.1 points. The gap is currently 31.5 points. This is another reminder of how people can interpret the same fundamentals very differently.“
Hoisington AM, as long duration bond fund managers, practice sound economic thinking.
Hence, especially in the current situation, it is always worth reading their quarterly letters.
Q1 letter covers why they think US monetary policy has been a disaster, causing a cost of living crisis. In terms of outlook, they rattle off a huge list of recessionary indicators flashing red but place the outturn firmly at the command of the Fed.
Q2 letter discusses the damaging effects of rapid monetary policy acceleration and deceleration. It also prints another list of already present recession indicators.
The key balance point remains – recession is in the works which pushes inflation/growth/yields down. However, if the Fed falters, returning to a pandemic type response next year – then we have another cost of living crisis to contend with.
“Oversimplifying monstrously, clean energy technology requires big CapEx outlays today for low or next-to-no OpEx for decades.“
“This is why finance is so important to clean energy—it’s the way we teleport those future OpEx savings through time and space to cover those higher upfront costs.“
So argues this interesting article, exploring clean energy.
This chart summarises the idea nicely (excludes things like biomass which are an exception).
On the 23rd of June 2016 the UK decided to, by a slim majority (51.9%), to leave the EU.
Some six years later this comprehensive report looks back to analyse the impact.
The hit to business investment, as seen in this chart, is clear – “UK business investment fell by 0.1 per cent a quarter on average in the three years post-referendum, compared to growth of 1.7 per cent a quarter on average growth in the previous three years, and ongoing growth in other G7 countries.“
However, the universally held belief that trade with the EU would suffer, didn’t materialise. “The UK has now been trading under the terms of the TCA [Trade and Cooperation Agreement] for 18 months, and, although UK imports to the EU have fallen relative to the rest of the world, the share of goods exports to the EU remains at its pre-Brexit levels.“
You are reading text right now. It engulfs our lives.
“Between 1900 and 1990, the amount of time the average American spent reading and writing remained broadly consistent: somewhere between one and two hours a day.”
With the advent of the internet and text messaging – this more than doubled to four to five hours.
It is estimated the average internet user sees 490,000 words per day (more than War and Peace!).
As this wonderful contrarian article argues – this might not, as many argue, be all good.
“Every time we read, we inevitably conceptualize the world, in perhaps an ever-increasingly abstract way. And it’s conceivable that we may reach a point where those abstracting effects go too far.“
Article sourced from The Browser – a brilliant resource.
This deck has been doing the rounds the past few weeks.
It is actually a good description of market downturns and how they work.
Especially recommend looking from page 10 onwards – to understand the various stages (P/E reset, earnings revision) and slide 23 – what capitulation looks like.
Based on this feels we are still not there yet.
Interestingly they are also raising a structured equity fund.
