Gold has gained 20% in the last two months and reached an all-time high of 2400 last week. That’s great, because prior to that, Gold did next to nothing for more than a decade. People are clearly worried, there are wars, there was government buying, and something to do with Gold’s inverse relationship with real rates, which is no more. What the current price of Gold suggests apparently, is that central banks may not be able to cut rates to help the economy, because inflation remains too high. That’s not good, neither is the pending apocalypse, but remember the last thing we will be doing in ..read more

Remember October? The economy was sputtering, hope had become a dangerous thing (Shawshank Redemption, 1994) and the S&P 500 was on its longest monthly losing streak since March 2020, down 9.4% from the highs, standing at 4100. Then something very strange happened in the neighbourhood (Ghostbusters, 1984), and talk of seven rate cuts in 2024 made the rounds. In an instant meat was back on the menu (Lord of the Rings, 2013), oil prices fell to 68, the Dollar index plummeted to 100, and the biggest equities rally we have seen in decades ensued. Merry Christmas. The problem was that the g ..read more

Over the course of the next eighteen months, there are going to be three major elections on both sides of the Atlantic. First, it is likely going to be Trump versus Biden Part Two in a clash of very different political ideologies. The polls are one thing, the age of the candidates another, and who knows what else can happen until November? Either way, it’s difficult to see how any of this should affect what we watch on Netflix or search on Google with our iPhones, and technology stocks remain poised for growth. Sometime before January of next year, the British public will finally get to vote ..read more

I suppose extreme distortion is what you get whenever you have the type of runs on markets that we have witnessed for quite some time now. However, when we see spreads like small caps to large caps, or emerging versus developed markets trading at multi-decade highs, you begin to wonder if this time truly is different. Certainly, it would be unlikely for companies such as Amazon or Google to ever lose 90% of their value again like they did when the dot-com bubble burst. The tech giants are producing too much cash, they control too much of our data, and they have diversified into many other ind ..read more

There is only so much bandwidth in the human brain, which means we can only focus on a few things at a time. Remember, every decision we make has dozens, and maybe even hundreds of different underlying sub contexts. There are also feelings involved, instincts, and pure coincidence that can determine what we do, when we do, and who knows why we do the things we do anyway, we are irrational, after all. The thing is, it is easy to stress out. It is estimated that we make 35000 decisions every day. Some of them involve the seemingly mundane, such as what type of cheese to put on a sandwich ..read more

They’re back! Less than a year ago, we thought we had put the final nail in the coffin in all things that are cryptocurrencies [Cryptos, Revisited]. FTX had imploded, Coinbase was getting sued, and prices were down by more than two thirds for Bitcoin and Ethereum. Yet here we are, within touching distance of new all-time highs. All it took was a verdict from the SEC, the need for investment managers to diversify, and huge speculative demand that is increasingly driven by FOMO. Can it continue, and what is the intrinsic worth of this new asset class anyway, is hard to say. One thing is for sur ..read more

There is nothing left to say about Nvidia, but what about the rest of the 55,280 stocks in the world? It’s a bit of a mixed bag for the rest of the Mega-caps. Amazon has not made any progress in three years, same for Google, and Microsoft may be fine, but Tesla is still down more than 50% from its highs. We did see the same thing in Meta once though, and it is now back to record highs. Bezos and Zucki did unload a few billion amongst friends as of late, which could be a sign of a top, but of course, super-yachts have become very expensive. Fact is, other investors also took some profits, to t ..read more

The bond market rally that started in October last year is no more. Yields across most of the curve are more than half a percent offside from whence they came. Commensurately, rate cut expectations for this year have gone from 7 to maybe no more than 3, and thus come in line with what the Fed has been telling us all along. Much ado about nothing, so why is the S&P500 still up more than 20%? Clearly, it has a lot to do with Nvidia. Up a staggering 81% in a mere three months, it is now the fourth largest company on the planet by market capitalisation, and there seems little in the way of st ..read more

There are very few positives coming out of Germany these days. The economy got hit harder than most when cheap Russian gas was taken away from its huge industrial base. Higher interest rates are decimating the construction sector, and the coalition government can’t seem to agree on anything, leaving the most populous country on the Continent going nowhere fast. So, what next? For those of us old enough to remember the nineties, this all seems eerily familiar. Back then, Germany was dubbed the sick man of Europe, and Schadenfreude was everywhere. Then something very strange happened and Gerhar ..read more

To get an indication for where the markets are headed, it can help to look at what the riskier parts of the investment universe are doing. Enter the “froth index” and it comprises all those asset classes, stocks, and investments that you wouldn’t want to be holding when things hit the fan. So, what are the tea leaves telling us now? Small cap stocks are still trading 20% from their peak even though the S&P500 has hit an all-time high. Usually, they lead the way in new bull markets, so the continued underperformance is a bit disconcerting. The regional banking index is also still nursing l ..read more