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BOND MARKETS WEEKLY – Financial repression on developed markets

Financial repression is a term that describes the fact that on many developed markets, real bond yields to maturity, i.e. nominal yields less inflation, are negative. The consequence of this fact is that holders of government bonds achieve negative returns in real terms and by...

• Bonds

EQUITY VALUATIONS WEEKLY – Valuations of large technology companies are completely out of reality

At our Bloomberg terminal today I discovered a very interesting stock index called "NYSE FANG+" with the ticker NYFANG. It is an index of the ten largest technology companies, led by American companies such as Apple, Amazon, Google and Facebook.

• Equity valuations

CHART OF THE WEEK – Mother of all bubbles

We believe that US technology stocks are in the biggest bubble in history. One of the widely used valuation indicators is the ratio of the market capitalization of the MSCI USA Information Technology stock index to US nominal GDP. During the technological bubble at the turn of...

• chart of the week

EQUITY VALUATIONS WEEKLY – Equity valuations indicate below average expected returns

Although the world economy is currently in the deepest economic recession since World War II and corporate profits are declining by an average of almost 30% year on year, stock markets are doing relatively well thanks to massive monetary stimulus from key central banks, with...

• Equity valuations

FINANCIAL MARKETS WEEKLY – Global equities continued to decline slightly

Global stock markets continued to decline slightly last week against the background of the US election campaign, the intensifying second wave of the global pandemic and worse macroeconomic data. As a result, the broadest global stock index MSCI All Country World weakened by 0.2%.

• Financial markets weekly

CHART OF THE WEEK – IMF updated the global economic forecast

International Monetary Fund (IMF) last week updated the World Economic Outlook (WEO). According to the updated forecast, global GDP is expected to fall by 4.4% this year, which is, among other things, a fold more than 1% decline during the global financial crisis in 2009...

• chart of the week

BOND MARKETS WEEKLY – Global volume of bonds with a negative yield close to the all-time high from l

So far, global bond markets have had an excellent period this year, thanks in part to unprecedented monetary stimulus from key central banks. The broadest global bond index, Bloomberg Barclays, has recorded a highly above-standard appreciation of 6.3% since the beginning of...

• Bonds

EQUITY VALUATIONS WEEKLY – Global P/E at the highest level in this market cycle

Although the world economy is currently in the deepest economic recession since World War II and corporate profits are declining by an average of almost 30% year on year, stock markets are doing relatively well thanks to massive monetary stimulus from key central banks, with...

• Equity valuations

FINANCIAL MARKETS WEEKLY – Global stock markets fell slightly

Global stock markets fell slightly last week as the broadest global stock index, MSCI All Country World, lost 0.3%. Of the monitored markets, Central Europe in particular did not do well, with the CECEEUR index recording a loss of -4.0%. On the contrary, Chinese equities were...

• Financial markets weekly

CHART OF THE WEEK – Zombification of the economy continues, not only in the US

A zombie company is defined as a company whose operating profit is lower than the interest cost of financial debt. Such a company literally burns cash and is dependent on constantly new debt financing to survive.

• chart of the week

BOND MARKETS WEEKLY – ECB's monetary policy is completely perverse

Italy has issued a new three-year government bond. There would be nothing special about that until we realize that this new bond carries a zero interest rate or zero coupon. Yes you read it correctly. The Italian government can currently borrow money for free on the financial...

• Bonds

EQUITY VALUATIONS WEEKLY – Global equity valuation close to this year’s high

After the September sell-off, stock markets are growing very strongly in October, with the broadest global stock index MSCI All Country World gaining almost 5%. As a result, our global equity valuation is close to this year's high at + 35%.

• Equity valuations

FINANCIAL MARKETS WEEKLY – Global stock markets grew strongly

Last week, all risky assets, led by stocks, grew strongly in line with expectations of a new fiscal package in the US. The broadest global stock index MSCI All Country World recorded a significant gain of 3.6%. Emerging markets were particularly successful, with the MSCI...

• Financial markets weekly

CHART OF THE WEEK – US labor market is still in a very bad shape

Before the outbreak of the global pandemic, weekly applications for unemployment benefits in the United States – initial jobless claims – were around a historic low of 200,000. At the end of March, weekly applications for unemployment benefits reached a barely...

• chart of the week

BOND MARKETS WEEKLY – Czech government bonds recording above-average performance so far this year

So far, Czech government bonds have had an excellent period this year, with their index attributing a highly above-standard appreciation of 6.6% since the beginning of the year, thus exactly copying the performance of the global government bond index.

• Bonds

EQUITY VALUATIONS WEEKLY – US stocks are extremely overvalued

We have long held the view that US stocks are highly overvalued. That's why we have them underweighted in our global equity allocation. One of the valuation indicators that clearly indicates the overpricing of US stocks is the Shiller's cyclically adjusted P/E (CAPE).

• Equity valuations

FINANCIAL MARKETS WEEKLY – Global stock markets grew slightly (October 2020)

Global stock markets rose slightly last week as the broadest global stock index, MSCI All Country World, posted a gain of 1.6%. At the same time, the MSCI All Country World index has been slightly down -0.2% since the beginning of the year.

• Financial markets weekly

CHART OF THE WEEK – Equities are no longer very attractive relative to bonds

To assess the attractiveness of equities against bonds on a relative basis, we created a special indicator, which we called the EB factor (Equities versus Bonds). The EB factor is calculated by subtracting the average global bond yield to maturity from the earnings yield or...

• chart of the week

BOND MARKETS WEEKLY – As a global asset class, bonds are the most expensive in history

Global bond markets have so far experienced an extremely successful period this year, with the broadest global bond index, Bloomberg Barclays, recording a gain of 5.8% since the beginning of the year. Therefore bonds have clearly demonstrated diversification benefits during...

FINANCIAL MARKETS WEEKLY – Global stock markets continued to decline

After stabilizing in the week before the last week, global stock markets headed down again last week. The broadest global stock market index MSCI All Country World declined by 2.1%. At the same time, emerging market equities, whose MSCI Emerging Markets index depreciated 4.5%,...