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  They have flocked to stock funds at a pace rarely seen since 2008 “Animal spirits are alive and well right now,”  A roaring market rally since the U.S. presidential election has driven up the price of everything from shares of technology and manufacturing giants to cryptocurrencies.   S&P 500 index and the Nasdaq Composite closed Friday within about 3.2% of their respective record highs.  With just weeks left in 2024, the S&P 500 is on track to jump more than 20% for the year, the second consecutive year of gains of that magnitude.  Wall Street Journal 17 November 2024 https://www.wsj.com/finance/investing/investors-are-betting-on-a-market-melt-up-3a007dd4 Tillbaka till Rolfs länktips 16-17 November 2024 https://englundmacro.blogspot.com/2024/11/rolfs-lanktips-16-17-november-2024.html

  It implies that prices rise and fall around a true value to which they always return. “But it is impossible to predict when mean reversion will occur,” Financial pundits have nevertheless been invoking mean reversion because the S&P 500 has risen by 94 per cent over five years to all-time highs. US stocks now account for a quarter of the value of the world’s equities.  The cyclically-adjusted price to earnings (Cape) ratio devised by Professor Robert Shiller tells you how many times stock prices can be divided by average earnings per share, with some adjustment for economic ups and downs. The number for the S&P 500 is currently around 38 times, not far from a pandemic-era peak of 44 times. Market doomsayers tend to envisage mean reversion in price/earnings via a drop in stock prices because this would be the doomiest way for it to occur. But rising earnings could also fulfil the prophecy more positively, via higher earnings.  I respect brokerage analysts for the...

  As Deutsche Bank points out, stock-market returns over the past 25 years actually haven’t been all that great Investors would have actually been better off putting all of their money in gold in December 1999 and keeping it there. Not only have stocks reliably outperformed alternatives like bonds over the long term, but the unsustainable trajectory of global debt accumulation increases the likelihood of another inflationary spike as governments around the world attempt to inflate away the debt. Periods of persistent inflation have in the past proven much kinder to stocks than bonds, although both asset classes took a beating in 2022. Setting all of this aside, the Deutsche Bank team remains convinced that stocks are the best choice for investors with a long-term time horizon. “It is true that some periods do see equity underperformance, but these don’t tend to persist much beyond a decade,” the Deutsche Bank team said. Joseph Adinolfi MarketWatch 12 November 2024 https://www.marke...

  Again, to be clear, a primitive overlay chart is no kind of evidence that the stock market is destined for a crash like 1929.  Nothing proves that the stock market is about to fall as it did on those two occasions.  But the higher the valuation, the higher the odds against continued strong performance. The spread of high-yield bonds’ yields over Treasuries, a crucial measure of the compensation you receive for lending to companies with weak credit, has dropped to a 17-year low in recent days Again, this absolutely doesn’t prove, or even suggest, that we’re about to stage a repeat of the GFC.  It does, however, strongly indicate that markets are very ungenerously priced for anyone who wants to enter.  John Authers  Bloomberg 12 November 2024 https://www.bloomberg.com/opinion/articles/2024-11-12/trump-post-election-stocks-rally-looks-just-like-1928   https://www.marketwatch.com/story/the-s-p-500-breaks-above-6-000-for-the-first-time-why-u-s-stocks-may-...

Friluftsbolaget Thule ska köpa det australiensiska bolaget Quad Lock,  som tillverkar mobilfästen för bland annat cyklar, för en köpesumma på omkring 3,6 miljarder kronor.  Enligt en analytiker som Di pratat med är prislappen billig.  DI 11 november 2024 https://www.di.se/live/glada-miner-pa-stockholmsborsen-lindab-och-thule-draglok/

Berkshire Hathaway is hoarding cash in a pattern seen before the financial crisis, but it has a new reason this time Buffett has turned cautious before in 1969 when he said markets were too frothy and also building up substantial cash in the years leading up to the global financial crisis—money he deployed opportunistically. With T-bills now yielding more than the prospective return on stocks, it might seem that Buffett has taken as many chips off of the table as possible since there is no upside in risky stocks.  Spencer Jakab Wall Street Journal 11 November 2024 https://www.wsj.com/finance/investing/does-warren-buffett-know-something-that-we-dont-48fabc9d 3.500 miljarder kronor. Så stor är nu kassan i Warren Buffetts investmentbolag Berkshire Hathaway Det mesta – 288 miljarder dollar – är investerat i amerikanska statspapper med kort löptid.  https://englundmacro.blogspot.com/2024/11/warren-buffett-slashes-apple-boosts.html   Tillbaka till Rolfs länktips 11 November 202...

  The bear market, when it comes, will be especially painful.  That’s because more and more stock-market timers are treating pullbacks as a buying opportunity The textbook illustration of why this pattern is dangerous comes from the top of the dot-com bubble in early 2000.  That was definitely a period of irrational exuberance, you may recall, fueled by the stock market’s extraordinary rise in the late 1990s, in which every pullback was indeed a buying opportunity.  So when the market did top out in March 2000, most market timers were confident that this decline would be yet another great occasion to increase their equity stake.  Incredibly, at the point when the market had declined 10% from its all-time high, the average recommended equity-exposure level among market timers focusing on the Nasdaq was higher than it was at that top.  That was irrational exuberance. We know that the stock market will not keep going up forever.  Contrarian analysis sugge...

3.500 miljarder kronor. Så stor är nu kassan i Warren Buffetts investmentbolag Berkshire Hathaway Det mesta – 288 miljarder dollar – är investerat i amerikanska statspapper med kort löptid.  Sommaren 2007 började finanskrisen att brisera på allvar då två hedgefonder hos Bear Stearns, som satsat stort på amerikanska bostadsmarknaden, kollapsade.  Det var också då som Berkshire började tömma sin kassa – och två år senare hade kassan nästan halverats. Givetvis sammanföll denna senaste bottennivå för Berkshires kassa nästan helt med finanskrisbotten för aktieindexet S&P 500. Det breda amerikanska aktieindexet S&P 500 värderas exempelvis till över 20 gånger väntade 2025-vinsterna.  Så höga har inte värderingarna varit sedan de glödheta åren 2020 och 2021.  Då räknar marknaden också med att vinsterna för börsbolagen som ingår i S&P 500 växer med drygt 15 procent nästa år. Johan Wendel DI 4 november 2024 https://www.di.se/analys/warren-buffetts-tysta-varning-akt...

  SPX | S&P 500 Index Overview | MarketWatch --- This past week, mixed earnings reports from Alphabet, Meta, Microsoft, Amazon and Apple contributed to a brief pause, but probably not an end, to the market rally. The longer-term returns for U.S. stocks have been impressive.  Despite terrible years the S&P 500’s overall performance over the last decade has been splendid. Including dividends, it has generated a total return of 13.2 percent annualized and 246 percent cumulatively. That decade includes the coronavirus pandemic, wars in Iraq and Afghanistan, as well as in Ukraine and the Middle East.  Even though inflation has been falling and the Fed has cut short-term rates in response, rates set in the bond market have been rising. Treasuries are the ultimate safe asset against which all others on the planet are priced. But another, ancillary market — for credit default swaps — is painting an ugly picture of U.S. government finances. Credit default swap prices refle...

  We need a 40 per cent or so reduction by the end of this decade to keep global temperatures in check. The UN warned that “national climate plans fall miles short of what’s needed to stop global heating from crippling every economy”. The S&P 500, Nasdaq and Dow Jones in the US again reached all-time highs this week, before Halloween spooked them.  Is it ever right to buy equities at all-time highs? It certainly feels wrong. Finance theory would concur. Expected returns mathematically drop when prices rise. And vice versa, of course. Therefore, I’d love the S&P 500 to crash.  I needn’t worry, though. It turns out that buying at all-time highs isn’t stupid in the least. One reason why is obvious: if equities generally go up, which they do, record levels will occur often. Stuart Kirk FT 1 November 2024 https://www.ft.com/content/57c39d18-a133-4436-8f99-e6bf9825a5e8 Tillbaka till WoS 1 November 2024 https://englundmacro.blogspot.com/2024/11/wos-1-november-2024.html

  It’s theoretically possible that the stock market will play out a “Roaring ‘20s” scenario for the rest of this decade. For that to happen, however, long-standing valuation indicators would have to be thrown out the window. There are more differences than similarities between today’s stock market and the one that prevailed a century ago.  Today it is more overvalued than at almost any other time in U.S. history, while a century ago it was hugely undervalued. In fact, in November 1924 — 100 years ago — the Dow Jones Industrial Average  had merely climbed back to breakeven from an economic downturn earlier in the decade.  That downturn was so severe that one economist at the time declared that the world was “nearer collapse than any time since the downfall of the Roman Empire.” The issue isn’t whether earnings and dividends can continue to grow, but whether they can grow fast enough to support current valuations.  History suggests that they won’t. Mark Hulbert Ma...

  Pressen ökar på Riksbanken att stötta ekonomin med snabba räntesänkningar.  Argumenten stärks för en storsänkning med 50 punkter nästa vecka. Nils Åkesson DI 29 oktober 2024  https://www.di.se/analys/argumenten-starks-for-storsankning-av-rantan/ Handelsbanken justerar sin prognos för Riksbankens nästa räntebesked och räknar nu med en dubbelsänkning https://www.di.se/live/storbanken-svanger-spar-dubbelsankning/ Dubbelsänkning nästa vecka. Sannolikheten är 90 procent. Sedan slutet av 2021 har ekonomin inte vuxit alls.  Det är anmärkningsvärt, men inte så konstigt. Fallande bostadspriser har minskat draget i byggsektorn, samtidigt som stigande priser och räntehöjningar har gjort hushållen fattigare. Tisdagens svaga siffror ökar sannolikheten för att banken drämmer till med en så kallad dubbelsänkning Men. Kronan har försvagats sedan Riksbankens septembermöte, med runt 20 öre.  Det är ganska mycket.  Prissättningen av kontrakt som handlas på marknaden indiker...

  US Stocks are trading near all-time highs, and at valuations that appear the priciest in years.  The index traded in recent days at more than 22 times its projected earnings over the next 12 months, its highest multiple since April 2021. https://www.wsj.com/finance/stocks/stock-market-magnificent-seven-earnings-valuation-dae61698 Stocks are expensive, but their rally can continue for at least another year. Here’s why. Momentum tends to trump valuation over the short term Stocks’ stellar run over the past 18 months has given investors plenty of reasons to celebrate. But it has also saddled them with some of the most expensive valuations in recent memory. The fact that stocks are priced so richly relative to fundamentals like earnings has started to make some investors, including hedge-fund star David Einhorn,  https://englundmacro.blogspot.com/2024/10/einhorn-says-its-most-expensive-stock.html wary of putting more money to work. But over longer periods, high valuations h...

  SvT 18 oktober 2024 https://www.svtplay.se/video/ed6MnZr/ekonomibyran/miljonarerna-drar-ifran Har den stigande svenska förmögenhets­koncentrationen på senare tid skett på övriga gruppers bekostnad? Inte mycket tyder på det.  Bostadsägande ökar jämlikheten i förmögenheter. Daniel Waldenström SvD 19 oktober 2024 https://englundmacro.blogspot.com/2024/10/vi-har-i-dag-fler-miljardarer-nagonsin.html Cervenka: De senaste trettio åren har varit en fantastisk period för alla som ägt tillgångar, alltifrån bostäder till aktier. https://englundmacro.blogspot.com/2024/04/cervenka-de-senaste-trettio-aren-har.html Andreas Cervenka  https://www.aftonbladet.se/av/andreas-cervenka Tillbaka till Wall Street och Stockholm 24 oktober 2024 https://englundmacro.blogspot.com/2024/10/wall-street-och-stockholm-24-oktober.html

  Det är en av de centrala delarna av det svenska finanssystemet som nu säljs Samtidigt är frågan vad de anställda som motiverats av att vara delägare tycker om att bli vanliga anställda i en delstatlig norsk storbank i stället. Det finns en hel del egensinniga personer på en firma som Carnegie När statliga PK-banken, numera Nordea, köpte Carnegie i slutet på 1980-talet blev det en tämligen misslyckad konstruktion med stora kulturkrockar. I mitten på 1990-talet såldes Carnegie också vidare. Torbjörn Isacson DI 21 oktober 2024 https://www.di.se/analys/valkommen-miljardvinst-for-mix-och-altor/ Den norska storbanken DNB Bank köper alla aktier i den svenska investmentbanken Carnegie Holding AB. Prislappen landar på 12 miljarder. SvD/TT 21 oktober 2024 https://www.svd.se/a/o39jb0/dnb-koper-carnegie-for-12-miljarder Carnegie köper Erik Penser Banks värdepappersrörelse. Familjen Penser blir storägare i Carnegie. ”Det är trevligt att komma tillbaka”, säger finansveteranen Erik Penser som 1...

Market strategists think the increasingly high valuation of the S&P 500 will squeeze out further room to run To predict simultaneously that an already strong market will have a great next 12 months and a poor next 10 years does imply  even, conceivably, a bubble. In the short term, markets are creatures of what Keynes called animal spirits. Things are moving emphatically in a bullish direction, making it hard to stand in the way in the short term. For the long term, scarcely anything matters other than valuation. The more expensive a stock when you buy it, the less of a return you’re likely to get for it over a decade or more.  The most widely followed measure of long-term value is the CAPE (Cyclically Adjusted Price/Earnings multiple) There are reasons why the CAPE would rise over time, as profitability and productivity grow. But it’s disconcerting that the S&P is more expensive than on the eve of the Great Crash in 1929, and not much cheaper than when the dot-com bub...

  Stock market rotation ‘lifeblood’ of the bull market The financial sector has the highest percentage of stocks beating the S&P 500 this year   “Most people are surprised by that,” as they tend to think it’s technology Tesla has a market value of more than $700 billion MarketWatch 20 October 2024 https://www.marketwatch.com/story/this-rotation-in-stocks-is-the-bull-markets-lifeblood-as-s-p-500-logs-record-peak-e9f11974 Tillbaka till Wall Street och Stockholm 21 oktober 2024 https://englundmacro.blogspot.com/2024/10/wall-street-och-stockholm-21-oktober.html  

  Stock market sees boom but bonds see economic disaster  Equities reflect expectations for soft landing, ... while other assets indicate growth ‘is slower than we think’ Bob Elliott, CEO and CIO of Unlimited and a former executive at hedge-fund Bridgewater Associates, highlighted these “mixed messages” in commentary shared with MarketWatch earlier this week. “The bond market seems to be predicting an economic disaster,” Elliott said of yields on longer-dated Treasurys.  “Meanwhile, the stock market anticipates the greatest tech boom in over 100 years,” Joseph Adinolfi MarketWatch 22 August 2024 https://www.marketwatch.com/story/stocks-and-bonds-are-sending-conflicting-messages-about-where-economy-is-heading-next-d6bbd199

One of Jamie Dimon’s daughters called him up from school with a question more than a decade ago: “Dad, what’s a financial crisis?”  The billionaire who runs JPMorgan Chase & Co. tried to put her at ease. “It’s the type of thing that happens every five to seven years,” he told her, he later testified to the Financial Crisis Inquiry Commission.  The problems are old, and the system is delicate: We let banks make long-term investments, including loans and bonds, while taking deposits from customers who can demand them back whenever they want. https://englundmacro.blogspot.com/2023/04/who-was-to-blame-for-failures-of.html History The Bank for International Settlements will gather top central bankers and financiers for a meeting in Basel this weekend amid rising concern about a resurgence of the “excessive risk-taking” that sparked the financial crisis. “The concern here is that the prolonged assurance of very cheap and ample funding may encourage excessive risk-taking,” the BI...

 A psychologist at Princeton University and winner of the Nobel Prize in economics, Kahneman died on March 27, age 90. Before the pioneering work done by Kahneman and his research partner, Amos Tversky, who died in 1996, economists had assumed that people were “rational,” meaning we are self-interested, use all available information to make unbiased decisions, and our preferences are consistent. Kahneman and Tversky showed that’s nonsense.  Jason Zweig Wall Street Journal 29 March 2024   Has behavioral economics lived up to the hype? https://englundmacro.blogspot.com/2023/06/has-behavioral-economics-lived-up-to.html