More money has probably been lost in timing the stock market than in corrections in the stock market. That seems to be the case again this year. After a tough 2022 investment year and a difficult December, investors were cautious early in the year and, in fact, they still are, given all the cash on the sidelines. The vast majority of economists predicted a recession. That recession did not materialize and, despite the banking crisis and the hassle surrounding the debt ceiling, the likelihood of it has clearly diminished. However, the stock market is carried by only a few companies that are benefiting from the hype in artificial intelligence. Now, the impact of artificial intelligence on the stock market and economy is at least as big as the Internet or the iPhone, nor is it something limit

The Bank of Japan has a new governor, Kazuo Ueda, and two weeks ago he held his first press conference. The result was a rising stock market and a falling yen. Ueda promised to be cautious about policy adjustments. That policy consists of a price ceiling on 10-year interest rates. The Bank of Japan buys up all bonds above that price ceiling. Normally then the market does the work for the central bank and interest rates do not rise above that price ceiling. But since the Bank of Japan raised that price ceiling from 0.25 percent to 0.50 percent in late December, there has been plenty of speculation since then that the Yield Curve Control policy is finite. For now, the surprise that interest rates will remain low for a little longer was good news for the stock market, less good for the yen. T

Although there is a tentative agreement between President Biden and Speaker of the House McCarthy, it must still be ratified by Congress next Wednesday. The problem is that the Republican party does not exactly speak with one voice. Fifteen rounds were needed just to elect McCarthy speaker of the house. Already 78 times the debt ceiling of the United States has been raised. The U.S. Constitution states that only the U.S. Congress may determine how much the U.S. government can borrow. Therefore, until 1917, every U.S. government loan had to be approved by Congress, but since the Second Liberty Bond Act of 1917, only the maximum size of the debt is set by Congress. If the president and Congress are of the same colour, an increase is a hammerlock. Similarly, when there is a Republican preside

The problem with such assumptions is only really a problem when those assumptions are enshrined in laws and regulations. One example I have frequently devoted a column to in recent years was the end of the neutral portfolio. For years, the neutral portfolio (50/50 or 60/40) was a much better investment than just shoving all your assets into the stock market, but because risk profiles are laid down in laws and regulations, at a certain point people only invested in (government) bonds because the same laws and regulations required it, something that simply cannot be changed quickly. Of course, there were possibilities to deviate even then, but in supervisory land, it is risky to stick your head out of the sand. If laws and regulations go wrong, they can quickly create systemic failures and t

The sentiment is at a low, some sentiment indicators cannot fall any further. Sentiment indicators are relatively good for determining a bottom in the stock market, much better in any case than for determining a top. Negative sentiment is much more contagious than positive sentiment and therefore highly clustered. These situations are usually relatively short-lived, whereas positive sentiment can last for a longer period. Anyone who had invested on the basis of sentiment indicators in the past twenty years could almost always have done so at the bottom.Against such a strong track record, there seems little else to say but that this time it is different, a dangerous statement in the financial world. But things are indeed different this time than in previous corrections. Since 1928, there ha

Ultimately, the strength of a currency depends on the strength of its underlying economy. Norway, as a major energy producer, has a strong economy and therefore a strong currency. Recently, the Norwegian currency has weakened remarkably, especially against the euro, to its lowest level in three years. Now there are many factors that influence the development of currencies and often it is only in retrospect that it is clear which factor was the deciding factor. As an energy producer, the Norwegian currency is somewhat more strongly linked to the dollar and thus to oil price developments, but this is not enough to explain the fall this year. However, a significant portion of the energy revenue is invested through the Norwegian Oil Fund, which after all amounts to swapping the Norwegian krone

The global equity market is only just below its highest point ever. This is probably caused by the rotation out of bonds and even cash into equities. This is because the real interest rate (interest minus inflation) is so negative that investors are, as it were, fleeing in equities. Contrary to bonds or a savings account, companies are able to compensate for inflation, which is also demonstrated by the strong rise in producer prices. In the last quarter of last year, the US economy grew (annualised) by a nominal 14 percent. This year, nominal growth of 9 percent is still expected. The extremely negative real interest rate is also undermining purchasing power. This phenomenon can also be seen in countries like Venezuela or Argentina, as soon as hyperinflation occurs. Then these stock market

The first quarter was a troubled one. The positive start was mostly a reaction to the extreme negativism in December month. Sometimes things in the stock market are simple. When everyone is negative, the stock market can only go one way and that is up. That was the case at the end of December. As many as 85 percent of economists were counting on a recession, and the sentiment indicators swung to the extreme negative. Even if fundamentally things are not going well, that makes it a good time to get in. During the quarter, it appeared that the economy was doing so well that the recession scenario had to be moved to 2024 or even beyond. The flip side of that is that the inflation numbers did look stronger than had been anticipated. Now there are the necessary one-time effects and adjustments

How long oil prices stay high depends on the energy transition. The moment it takes 30 years to switch to fossil fuels, there is still an excellent return for investors in oil shares. The moment we switch completely to alternative energy in ten years' time, that becomes a lot more difficult. The share of alternative energy is still negligible at the moment. Moreover, 100 million barrels of oil are still being burned every day, so the transition is not really visible in the statistics yet either.$Light Crude Oil - main 2205(CLmain)$ The transition to alternative energy is largely dependent on the availability of metals. An important raw material for batteries is Lithium, the demand for which will triple by 2025. There is a lot

Once again, US inflation figures are higher than expected, a new record for the past 40 years. It is also striking that the various methods of measuring underlying or core inflation suddenly started to rise sharply. Although crude oil prices have fallen, petrol and diesel prices are relatively high due to the shortage of refining capacity. That shortfall could widen later this year when the storm season hits the US South Coast in earnest. La Nina and above-average temperatures in the Atlantic Ocean will bring more and heavier storms this year.Producer prices also rose by 18.6 per cent (!). In the 1970s, there was only one month in which producer prices rose more steeply (by 19.6 per cent). In a little while, the 1970s will pale into insignificance with today's inflation levels. The problem

Prices of agricultural commodities are falling, but as production also falls, hunger threatens to become an increasing problem. Even before the agreement between Ukraine and Russia on the transportation of grain across the Black Sea, agricultural commodity prices were under pressure, helped by fears of recession, a good harvest in Russia and hopes of resuming grain exports from Ukraine. Yet the underlying factors that drove prices upward are unchanged. The war in Ukraine is just one of many factors influencing food prices. Besides war, climate change is also playing an increasing role.Because of the war, Ukraine exported 40% less grain in June than in the same month in 2021. When farmers cannot sell their grain, they do not have the means to buy new seeds and fertilise the land. However, h

In the long term, shares follow the underlying earnings trend. Many analysts are therefore engaged in predicting this. However, there is no fixed relationship between earnings (growth) and valuation. There are many factors that influence this. The annoying thing in the coming months is that both profits and valuation are likely to come under pressure. Earnings because of the recession orchestrated by the Federal Reserve, valuation because of rising inflation and interest rates.At present, the stock market is still valued as if inflation were a temporary phenomenon, despite the fact that there are more and more signs that inflation will remain structurally high in the coming years.This is more true for the United States than for Europe; in Europe, there are other reasons (mainly energy) for

On 22 January, according to the Chinese era, the year of the rabbit begins. The rabbit symbolises patience, happiness, and peace. China could use that after the year of the tiger. The low point for the Chinese stock market was reached on 31 October. Since then, the MSCI China index has risen more than 40 per cent. The Golden Dragon index which includes Chinese companies listed in the US is even up 74 per cent. There were two major problems in the Chinese economy that were self-inflicted (and therefore can be solved by Beijing). First, there is a problem in the property market where Beijing cracked down on property developers, leaving a major developer Evergrande in trouble. As a result, the property market was locked, but in recent weeks there have been many initiatives to revive the marke

The increasing use of artificial intelligence is accelerating the semiconductor supercycle. It is now fifteen years since there was a real downturn in the chip industry. Since then, chip companies' share prices have increased fifteenfold. Last week, the semiconductor index even rose 11 percent in one day, a feat unprecedented this century. All thanks to Nvidia, which on the same day posted its biggest ever share price gain thanks to stunningly strong results. I previously wrote about the semiconductor supercycle in April 2019 and April 2021. Even earlier this year, when there were doubts related to the approaching recession and the increasing technological battle between China and the United States, there was brief speculation about whether the end of the cycle would now be in sight. But n

With each crisis, new opportunities are created. A banking crisis can even be an impetus for the next bull market since all too often a financial crisis is a trigger for a monetary policy adjustment. In fact, the Great Financial Crisis was followed by the largest bull market ever. With interest rates at zero, there was no alternative to equities, with U.S. CEOs and CFOs also feeling the panting breath of private equity investors breathing down their necks (although executive employee stock options in themselves created a strong focus on the stock price) and began optimizing their balance sheets. With interest rates at zero - and as a result, extremely low credit spreads - the cost of debt was so low that there was plenty of borrowing to buy back shares. Year-on-year, companies themselves w

Everything in the world consists of energy, and in that respect, the economy too consists of nothing but energy. Nor is it surprising that after the invention of the steam engine, the world's economic growth exploded, so to speak. Energy is what drives today's society. In developed countries, the consumption of energy is hardly growing in recent decades. The effect of increasing prosperity is offset by the increasingly efficient use of energy. This is not the case for many less developed countries. These are sometimes still in the transition process from burning wood to using fossil fuels, although they are increasingly skipping that step and switching from wood to alternative forms of energy. The demand for fossil fuels in the next 25 to 30 years will grow by 25 per cent, in line with wor