Will This Unprecedented Situation Continue?

The factors that have produced the current negative return environment: negative real interest rates and stock markets driven to valuation peaks by unjustified investor expectations are major reasons why we view the current risk/reward prospects offered by markets are less than compelling.

The resolution of this problem must involve either…

Valuation Contains A Lot Of Information

Valuation levels are a constantly debated topic given their presumed influence on future investment returns. Yet, market forces regularly drive valuation metrics to extremes. We are at such a juncture, with cash flow as a percentage of market cap threatening to break below the historically low levels seen at the…

What Next?

We have written for some time in these weekly commentaries, and in greater detail in the pages of the Global Investment Letter, of our expectation that the global economy will begin to slow significantly in the second half of 2021.

When we began writing of our reservations about…

This Timeless Thought Has Never Been More Appropriate

“YOU CANNOT ESCAPE THE RESPONSIBILITY OF TOMORROW, BY EVADING IT TODAY.” ABRAHAM LINCOLN

This quote by perhaps the greatest American president serves as a powerful reminder to us all that the actions we take today will have an influence on our futures…

Will The Optimism Of Investors Be Disappointed?

IS THE STOCK MARKET BEGINNING TO REFLECT DECLINING EARNINGS?

It remains our view the recent stimulus-induced surge in global economic growth is temporary and will slow considerably in the second=half of 2021.

This view is supported by analyst earnings estimates that suggest a…

Share Purchases By Large Companies Can Affect Index Returns

The increasingly narrow breadth that has characterized the stock market in recent years is typified by the FAANG+Microsoft group. …

Investors Are Currently Coping With The Lowest Real Returns Since The 1970s.

The real earnings plus dividend yield of US equities have fallen below the rate of inflation for the first time since the mid-1970s. It is noteworthy that the 1970s event preceded a very sharp decline by stock markets.

The factors that have produced the current negative return environment: negative real…

The Level Of Consumer Spending Plays A Major Role In The Economy

The consensus opinion supporting the current level of investor optimism currently reflected by markets rests largely on the expectation that consumer spending will produce strong economic growth in the years ahead.

However, the level of consumer demand may not be what markets expect. Consumer spending on durable goods rose significantly…

What Are The Likely Consequences?

The velocity of money sits near all-time lows and is slowing, a result of ballooning money supply and the waning of the stimulus effects on the economy.

The velocity of money reached a peak in the late 1990s before declining in response to the crash of the internet stock bubble…

The Problem With Interest Rates

The defining economic trend of the past 40 years has been the decline of interest rates to current levels that are now negative in much of the world and essentially 0 in the United States when the price of a good or service is 0 or negative, that market creates…

Jonathan Baird CFA

PUBLISHER OF THE GLOBAL INVESTMENT LETTER. AWARD-WINNING MONEY MANAGER. SPEAKER ON GEOPOLITICS AND MARKETS. www.globalinvestmentletter.com

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