As is by now widely reported, China stocks have been on something of a tear in the past few weeks, with the CSI300, for example, up by around 20% in that time. The usual suspects have been at work as the PBOC has encouraged a renewed money flood into being and those desperate for an income – and possibly with little else to do, at present – are enticed back into what is merely the latest in the nation’s rolling series of mania and speculative booms. Continue reading
Tag Archives: leverage
Overstretch
Markets have paradoxically both been on edge – and in the throes of euphoria – since the repo shock in mid-September, being at the same time alarmed and yet strangely reassured by the Fed’s frantic backpedalling and the $400+ billion boost to its balance sheet which this entailed.
However, at a time when an already faltering flow of business revenues across the major nations has now to weather the unquantifiable, but potentially far-reaching, disturbance spread by the China coronavirus outbreak, the margin for error seems slim, indeed. Extreme levels of overstretch are everywhere apparent.
To download as a PDF, please click here: 20-02-21 Overstretch
The Turn of the Tide
Have we finally reached the high-water mark of the current bull run? Is all the good news in – and the last, most shaky, marginal buyer along with it, inveigled in by the bounce from February’s brief Vol-au-Vent? If so, what are the implications? Where are the trigger points? How will any weakness manifest itself? Continue reading
Risk Par(i)ty
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:-
The Mephisto Polka
[This article appeared in edited form in the Epoch Times and also in the Daily Telegraph]
In her recent set-piece testimony before Congress, Janet Yellen made clear that she is determined to repeat the sort of ‘gradualism’ in raising rates that proved so disastrous after the Tech bust. In other words, that she will not so much boil the frog slowly as encourage him to go out and make a further raft of foredoomed, highly-leveraged investment decisions before he realises he’s been cooked.
Patience, Bund bears! Patience!
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 for the latest Monitor
Just how overvalued ARE US equities?
In this complimentary extract from last month’s edition of ‘Money, Macro & Markets‘, that’s the issue at which I take a detailed look. Please follow the link to access the PDF:-