One of the truisms of the current market is that volatility – both historical and implied – is historically low, but just how extreme is it? How does this manifest itself in the bond, as opposed to the stock, market? What does it tell us about the risks we may be running by maintaining naked exposures?
Please follow the link to find a brief, but instructive overview of this most burning of issues:-
Are equities ‘overpriced’ and if so, by how much? What about bonds or that largely forgotten asset-class, commodities? How do the three of them inter-relate and can we take advantage of such behaviour in order to build a better, more macro-resilient portfolio?
We take a detailed look, here, in the presentation found by clicking on the link:
Does it make sense to plot multi-decade asset prices on a linear scale? How reliable are macro ‘profit’ estimates? Why is the curve flattening and what will a reduction in Central Bank reserve balances mean for assets?
Some readers may be interested in putting a voice – and even a face – to the author. Below are links to three recent audio-visual publications in which I discuss US & Chinese macro as well as the interrelations between the three great asset classes of stocks, bonds, an commodities. Following on is a wider sampling of my views. Continue reading …
A little over 10 years ago, a hitherto obscure German institution called IKB – majority-owned by an arm of the German government – suddenly made headlines around the world.
On the last day of July 2007, a company which ironically had its origins in a foredoomed effort to ‘stimulate’ the German economy in the aftermath of the Weimar Republic’s disastrous by financing small businesses, but also by partaking of the contemporary, pre-Depression boom in real estate, revealed that, once again, it had been seduced by the lure of a property bubble. [A version of this article appeared as part of the inaugural edition of ETF Stream] Continue reading …
Birmingham statistician and financial forecaster Arthur H. Gibson’s so-called ‘paradox’ came about from his detailed empirical findings that the level of bond yields (as measured by the price of British Consols) tended to follow – with a lag of around a year – the price of wholesale commodities (a measure he adopted, as he himself explained, as a proxy for what he thought was the real crux of the issue, the cost of consumable necessities for which no comparable data existed). Argument has abounded as to the phenomenon’s true explanation, ever since.
‘Dollar makes worst start to the year since 1985,’ screamed the headlines a few weeks ago in a classic click-bait attempt to get people to read about what they already should know by using a somewhat artificial statistic – after all, since when did the world revolve around what happened specifically between Dec 31st and July 31st?
No, Mario is NOT about to give up – whatever! China monetary trends might mean the industrial earnings cycle has peaked. US debt levels are still OK, but the low cost is promoting slightly worrisome growth – nor are Tech balance sheets entirely without blemish. Commodities – clueless and friendless.
Please click the link for my latest thoughts, including a look at equity margin debt, the broad symmetry between today’s richest-ever & the 1980s’ cheapest bonds, the new natgas bulls, China, and gold. 17-05-29 M4 No 2