MM 7 December 2020

Quotes

“In investing, a bull sounds like a reckless cheerleader, while a bear sounds like a sharp mind who has dug past the headlines.”

Amongst the most consistent perma bears, John Hussman stands out. His views are based on historic data sets, that “prove” the link between value and future return. In essence, the higher the price (relative to income), the lower the future returns.

Below is his most famous finding using a 60/40 portfolio and showing that the yield of that portfolio predicts quite accurately the 10y rolling forward returns

Markets & Macro news

In Europe, lock downs are starting to tame the progression of the virus

In the US, lock downs are about to be imposed in the most progressive states

Jobs recovery now stalling just as unemployment benefits running out for many on December 26th

Ready for vaccination ?

Greatest equity rally of all time

Here is another measure of S&P 500 valuation

Euphoric times

Fuelled by retail appetite

There may be some fuel left in the tank

    What’s clear is that the yield curve says, get out of bonds and cash and buy economically sensitive real assets

PE expansion buoyed by central bank's money printing. Now is the time to buy EPS growth as the money must go back into the real economy

And commodities look cheap. What do you need in a recovery scenario?

Dr Copper is leading the charge

Seasonality works and could spell rebound for gold in the coming months

Bitcoin DeMarks count could indicate correction ahead

Themes, Sectors & Corporate news 

Department stores closing at an accelerated rate (Debenhams filing for bankruptcy protection in the UK, a few days after Aracadia went bust). At the same time, online delivery specialist Doordash is preparing for big IPO.

This technology revolution is only getting started...