Who says US rates will go up for real? Maybe the Fed’s endlessly extended expectation will do. No real rise yet but there has been worried talk of liquidity problems all along. Bears may gasp for breath as the very idea of de-leveraging seems to evaporate. Unperturbed, the ageing bull isn’t roaring but keeps coughing up recoveries as dips for fomos. Derivatively disconnected from the real economy, valuations have been un-moored by QE for ages. Even after a fractional interest rate rise or two, credit will still be cheap and remain as elastic as the valuations. Real or not, the show can’t stop as long as TINA screams for More!
But forever? “Like all cycles, they cannot go on forever. Market cap cannot exceed GDP forever. Valuations cannot go up forever. Debt burdens cannot grow forever. …” Read Kit Winder’s The End Game for a reminder of fundamental reasoning.
Could this time be different? Will resurrecting fundamentals correct the financial incontinence and let the bears have their ball? Will 2022 be the year of the stockmarket crash? Just in case, maybe it’s time to rotate. But then where to go? Should the bubble look like bursting, will there be an old fashioned stampede into safe&sound? A goldrush? Unprecedented cryptomania? Or a run for cover on land in a final submission to real-existing rentier-capitalism?
Fine wine – According to the investment firm Premier Cru, it would have provided a phenomenal return over the past 60 years. Our £100 could today be worth as much as £478,000 tax free.thisismoney.co.uk 2012 best investment past 60 years, shares, gold, property, savings? By Ian Lyall
Whatever your preference, best order some wine with it.
Please pick your own from the February’s Real World Updates
articles – Crash? What Crash!
economist.com 11-2-2022 The next crisis – What would happen if financial markets crashed? – Look to history for a guide, but know that next time will be different
reuters.com/ 1-2-2022 Betting on a ‘very unlikely’ ECB rate move …”…With ECB rate rise bets piling up and four-five Fed rate hikes discounted already for 2022, the euro bounced off 19-month lows against the greenback and German bond yields rose to the highest since 2019. …”…
marketwatch.com 31-1-2022 Bears beware. Past corrections for the S&P 500 are only 15% on average, outside of recessions by Joy Wiltermuth
forexlive.com 31-1-2022 Does the S&P 500 Hitting SMA Mean a Bear Market Is Coming? – The S&P 500 hit a new record on the first day of trading this year, and since then has pretty much been heading downward.
research.danskebank/pdf 31-1-2022 UK BoE preview: Another rate hike and passive QT
bloomberg.com 8-2021 Liquidity Is Evaporating Even Before Fed Taper Hits Markets – Gap between money-supply growth and GDP is now below zero – Negative readings in last decade spelled trouble for S&P 500 – Fed Is ‘Adjusting the Dials’ on Inflation: Pimco’s Schneider – By Lu Wang
“A measure of U.S. financial liquidity whose declines foreshadowed two of the decade’s worst equity routs is flashing alarms even before the Federal Reserve embarks on its planned winding down of asset purchases. The signal is obscure, but has sent meaningful signs in the past. Roughly speaking, it’s the gap between the rates of growth in money supply and gross domestic product, an indicator known to eco-geeks as Marshallian K. It just turned negative for the first time since 2018, meaning GDP is rising faster than the government’s M2 account. …”…
thisismoney.co.uk 2012 What has been the best investment of the past 60 years, shares, gold, property or savings? By Ian Lyall …”...Property – That house 60 years ago would have set you back £1,891, according to the Nationwide. Today it would be worth £164,134 – a very handsome return on your initial investment. … Fine wine – According to the investment firm Premier Cru, it would have provided a phenomenal return over the past 60 years. Our £100 could today be worth as much as £478,000 tax free. …”…
theguardian.com 4-2021 Bill Gates is the biggest private owner of farmland in the United States. Why? – Gates has been buying land like it’s going out of style. He now owns more farmland than my entire Native American nation – by Nick Estes
whoownsengland 2017 WHY IS JAMES DYSON HOOVERING UP LAND?
…”…Dyson has also been making headlines lately by warning the Government not to cut farm subsidies after Brexit. Commentators have been quick to point out that Dyson himself is one of the biggest beneficiaries of the current system of farm subsidies: last year, his company, Beeswax Farming (Rainbow) Ltd, received £1.8million in payments. …”…