WM 27 March 2021

Quotes

"When a measure becomes a target, it ceases to be a target"

How do pandemics compare?

Bubbles

The danger of market timing

Markets & Macro

All about the money? Then we are getting closer to the end

That said, cyclical rotation has given breadth to this rally

New highs to be tested, correction in May-June, then retesting

Stocks for the long run in one chart

The shorts have capitulated. Contrarian indicator says time to look for shorts

Volatility smile agree: we are reliving Nifty Fifty and Internet bubble conditions

Growth stocks have peaked

Nasdaq looks like a Head & Shoulder

Takes a lot of money to move trillion dollar megacaps and a few pennies for microcaps

Peak Nasdaq is clear

To be fair, silliness had to stop

While those chasing higher rewards must always remember they must be taking higher risks to do so

When too much money chases too few things, prices rise

But the higher the price, the lower the returns

At these prices, do not expect markets to offer great returns on aggregates. Earnings may rise, but the higher PE megacap stocks will contract

For long term investors, the future is always bright and negatively yielding decades have been the exception rather than the rule

If you focus on normalised earnings and pay the right price, you should be fine

The market is indeed split and not all in yet

Economic signals are more moderate

Even if the recovery potential and disclocation created by Covid is massive and offers big recovery potential

Add the USD 1.9tn stimulus followed by another USD 3tn infrastructure plan in the US ( = 25% of GDP combined!) and you have the recipe for fireworks

Of course, someone is gonna have to pay.

Inflation is the first manifestation of money getting back in the real economy and driving prices of goods and services higher

Commodities could be the ultimate recipient of this monetary profligacy

Breakout confirmed

And inflation has not really caught up with the new economic reality. In fact, you could argue that commodity inflation is mandated by governments to drive change. Change in monetary conditions (kill the debt by inflation) and in economic conditions (forcing the ESG transition with price incentives to not waste resources that are not precious enough price wise)

Perhaps these higher prices is why the consumer is not feeling so happy

Yields are saying inflation is on its way too

Some say the correction has gone too far

But the yield curve suggests that if a pause is possible, this cycle is only at the beginning

Put in the context, some may believe the trend in interest rates is for deflation rather than reflation. Clearly, someone is gonna wake up with a hang over soon