When world leaders talk, markets react. And with social media becoming mainstream, politicians have a new way of getting their message to the masses.
Current market valuations are consistent with negative expected returns for the S&P 500 over the coming 10-12 years, with a likely market loss of more than -60% in the interim.
About 100 years ago, Argentina was one of the wealthiest countries in the world by virtue of its fertile land. Its economy thrived by shipping beef and grains around the world. But economic and political turmoil through the 1930s sowed the seeds of populism — the effects of which have lasted decades.
The Fed will enter uncharted waters as it begins to reduce its balance sheet, in addition to raising short-term interest rates. How should investors respond?
It is extremely difficult for an active manager to buy the best companies and/or short the worst companies and show much outperformance relative to the passive index funds. No matter how much research you do, no matter how well you know those companies, your research is not giving you an edge over the massive movement to passive investing.
Nearly a decade after the onset of the global financial crisis, real economic growth remains constrained by high levels of household debt, particularly for those in the bottom 80% of the income distribution. The build-up of indebtedness in these households that largely pre-dated the crisis continues to cast a shadow over the real economy.
Current market valuations are consistent with negative expected returns for the S&P 500 over the coming 10-12 years, with a likely market loss of more than -60% in the interim. The proposition that “lower interest rates justify higher valuations” has become a rather dangerous slogan, and is a distressingly incomplete statement that ignores the other half of the sentence: “provided that the stream of expected cash flows is held constant.”
This week we are going to take a hard look at the unfunded liabilities and debt of the US government. And even though the federal unfunded pension liabilities dwarf those of state and local pensions, I want to make it clear that I believe the state and local problems will be far more intractable.
We believe it’s not too late for investors to seek attractive relative value opportunities and reposition equity exposures in this aging cycle.
The present moment of blissful delusion is remarkable to witness. Take it in. A few words and updated charts will do.