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28 05/21 28/05/2021

Allocation is crucial in investing. It is described as an amount or portion of a resource assigned to a particular recipient. One can allocate based on type of security (asset), market value size, credit rating, and geography. These may be for mere diversification purposes or to try to capture growth. China has been coming up a lot lately as one of the best geographical allocations to capture growth. China went from a closed communist economy to become the 2ndMore

21 05/21 21/05/2021

Bitcoin, although the best performing asset class this year, entered into a free fall this week bringing other cryptocurrencies along with it. The coin began to retract last week when Elon Musk, the CEO of Tesla, tweeted (posted on social media) that Tesla will not be accepting Bitcoin as a payment method anymore. The price later stabilized when Musk tweeted that Tesla will not be selling its $1.5 billion stake in Bitcoin. Bitcoin went into another free fall this week as another tweet of Musk implied the opposite. On top of that the People’s Bank of China also ruled out cryptocurrencies as a method of payment. China is[...]

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21 05/21 21/05/2021

Following last week’s news on the Colonial Pipeline, everything is back to normal which led to oil prices retracting. Gold prices on the other hand are on the rise recently hitting a 3-month high. As you could have seen from your portfolio highlights, asset classes such as stocks (more so value stocks), commodities, oil, and Bitcoin are among the best performers so far this year. Among the worst performers are investment grade bonds, government bonds, and gold. Do not be shocked if this trend continues through the end of the year.More

07 05/21 07/05/2021

European and U.S. markets headed higher this week as more companies reported their quarterly results. Companies reported earnings that were on average 23% better than the expectations. Their outlook on the rest of the year is also rosier than in previous quarters although inflation is constantly brought up as a risk factor. The often-repeated market rotation is persisting. Tech stocks has been under pressure the last couple of weeks as they are exchanged for recovery stocks such as energy and utilities. Stay-at-home stocks that were the stars in 2020[...]

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16 04/21 16/04/2021

This week marks the beginning of earnings season. This means that publicly traded companies will start to publish their 1st quarter results. Investors will get to see if the companies they hold performed according to expectations or if they missed the mark. The analysts consensus is that the overall market will have increased earnings compared to that of the 1st quarter of 2020. It may sound like a repetition, but Jerome Powell remarked last Sunday that the U.S. economic outlook improved substantially and the Fed is not planning on raising interest rates this year. Although the Fed said multiple times that it is not planning on raising interest rates in the[...]

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26 03/21 26/03/2021

Yields on the 10-year U.S. Treasury bonds stayed stable throughout the week after last week’s 1.7% high. Volatility, tracked by the Volatility Index (VIX), has been fairly low this past month. The U.S. however faced retracting home sales, personal spending, and manufacturing numbers. Oil also dipped below $60 per barrel again. Fed Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen announced this week that the U.S. economy is recovering at a higher pace than previously expected and believe that the GDP will spike this year. What is left behind so far is the labor market and inflation. Powell and Yellen are both of the opinion that there is a need for more[...]

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12 03/21 12/03/2021

The Organisation for Economic Co-operation and Development (OECD) upped their 2021 and 2022 economic forecast due to the approved U.S. stimulus. This approval is expected to have a positive spillover effect on other economies. To be precise, the global economy is expected to grow a full percentage point. Think about the increased import (and perhaps even export) when $1.9 trillion is injected into the world’s largest economy. The OECD increased its 2021 global GDP forecast to 5.6% and its 2022 global GDP forecast to 4.0%. The U.S. GDP forecast increased to 6.5% and 4.0% respectively for the year 2021 and 2022.More

The U.S. financial markets stabilized this week and started to move back north. The U.S. economy is still strengthening and the approved $1.9 trillion U.S. stimulus plan is putting pressure once again on growth stocks and bonds. Oil continued on the rise surpassing $71 per barrel for the first time in more than a year but retracted later in the week. The stock market rotation is persisting while bond yields are cooling off from last week highs.
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05 03/21 05/03/2021

Markets have been zigzagging for a week now as bonds are increasingly competing against stocks. As you may have heard countless times, interest rates were near zero (some places even negative) for a while which led bond investors to swap their bonds for stocks. Now that interest rates are rising some of this capital is returning to bonds. The 10-year U.S. Treasury (U.S. government bond) reached 1.6% yield last week for the first time since February 2020 then backed off. This made the 10-year Treasury yield at the time higher than the dividend yield of the S&P 500. In simple terms, the U.S. Treasury yielded more than[...]

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26 02/21 26/02/2021

According to Jan Hatzius, chief economist at Goldman Sachs, the U.S. has more than $1.5 trillion in forced excess savings thanks to all the stimulus packages, depressed consumption, and containment measures such as lockdowns and travel restrictions. Seeing that all these variables are still at play, the forced excess savings are expected to rise to $2.4 trillion (11% of GDP) by the time we reach a “normal” economic life, said the economist. This is expected around mid-year. More

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