WM 2 April 2022

Quotes

Putin's philosophy

Lessons & Thoughts

Value creation

CIA report

The CIA is a great source of geopolitical analysis. The website is a treasure trove of data and a must read to understand how countries operate. The world in 2040 is a summary of the agency's analyses on various trends. Their methodology is comparable to our 4 drivers of history approach, whereby history is the result of the interactions between demographics, environment/resources, technological progress and socio-nomical developments. These four structural forces explain the secular megatrends. Then underneath emerging trends concerning society, governments and international relationships are merely derivatives of these forces.

Macro news

Globalisation is dead, long live globalisation

The empires strike back

Elections

Consumer feeling the pinch

Wages

Confidence measures are schizophrenic

Growth: slowing

While all eyes are on Russia, nobody's watching the true challenge of our time

What if China goes with Russia
Inflation

FX war

Precious metals

Gold miners are breaking out! Big move ahead?

What about silver (gold on steroid)?

Crypto

The 19millionth Bitcoin has been mined (only 2m left to go)

Back to reality oh there goes gravity

Fixed income

The worst bond rout marks beginning of a new cycle?

Negative yields melting up

Inflation vs recession

Inversion says inflation to drive recession in 12-18 months time

Banks are worried now = stagflation + recession risk rising

2y yield to hit resistance soon. Time to buy US 2 year treasuries?

5Y bonds says another leg down in bonds before climax yield rise

10y yields cannot go above 3% given the size of US debt pile

Corporate spreads are rising and likely to cause troubles in leveraged structures
High yield

US vs China

Bubbles: student loans

Real estate

The largest asset class in the world has some serious troubles ahead. Higher prices = lower affordability while higher mortgage rates = lower liquidity. Housebuilder share prices are already correcting.

Not just in America: everywhere

Equities

Households overexposed: equities as safe as house...

Mind the gap

3 hikes and a stumble
Fed valuation model
Geometric index

Seasonality: will be lower before it gets higher

Corporate profits too high and ripe for correction

Value and earnings yield

Manipulations?

Retracement

In summary: don't even think this is not the top



This is it

Nowhere to hide

Bear market rallies look like that: quick retracements frustrating the shorts, then new lows

In the 1970's
1971 US abandons Bretton Woods and let the US dollar free floating. Then, arab states attack Israel on Yom Kippur on Oct 1973. The OPEC retataliate to US support to Israel sending oil prices to the roof. Inflationary bear market followed

Discretionary funds are not seeing what the systematic guys see

How much downside?

Beware of the volatility