Key Findings from the Latest Monthly pack:Global monetary policy settings are increasingly shifting from headwind to tailwind as inflation falls and economic cycle data remain soft.The major macro dilemma for investors at this stage is the tails; resurgence risk on the one end (growth reaccelerates, inflation resurges), and recession risk on the other end (recession takes hold, deflation comes into focus).The second coming of Trump exacerbates this, with a puzzling policy path potentially pushing up inflation, but also raising recession risk (it will all depend on what gets implemented, how quickly, to what degree, and the second order effects e.g. with fiscal consolidation headwinds).The main upside risks for growth assets would be: a macro middle path (goldilocks, policy perfection), Chi

In the age of the “everything bubble”, it’s not often that you come across a chart saying something is outright cheap, or even near-record lows for that matter…And I know what you might be thinking — “it’s cheap for a reason“ or “it’s a value trap“ or maybe even “valuations don’t matter“.And there are situations where either or all 3 of those claims can genuinely apply.For example, “cheap for a reason“ is almost always true, because most of the time when an asset or market is cheap it’s because of a cyclical deterioration in fundamentals, or some kind of shock/crisis, or some other logical reason. A lot of the time that deterioration is transitory, and markets often overreact to that deterioration — driving valuations down further than they really should be (aka opportunities).Meanwhile “i

It’s not just the USA and Europe, EM corporate credit spreads are pushing lower as a warm blanket of complacency is wrapped around markets. The upside is that it likely does reflect an element of improved fundamentals given relative calm in macro and markets and improving data out of China. Furthermore, again — this can become self-reinforcing in that it reflects easier financial conditions, supporting growth and risk-taking, which in turn imparts a cyclical improvement in fundamentals.But the problem is it represents a very low risk premium for investors should things deteriorate. On my analysis I’d prefer EM sovereign bonds (ex-China), and EM equities where the risk premium is much larger and the upside potential asymmetric (but in the right direction… whereas corporate bond returns are

Myself and others have highlighted how European Equities have been breaking out to new all-time highs on the back of bullish factors such as cheap valuations, monetary tailwinds, improving (geo)politics, reforms, and so-on.But not many have noted the similar bull market underway in European credit markets.Much like what I observed with US credit spreads, European High Yield Credit Spreads have been steadily narrowing and making new lows. The point of contrast would be that Europe hasn’t quite revisited the pre-08 lows like the US has, but it sure is on a trajectory to get there — and is very clearly already at the bottom end of the range.On face value this is a positive sign, it means credit investors are confident on the state of things, and are happy to take on credit risk. At the same t

This highly pertinent chart from the latest GoldNuggets Digest report shows what is basically the forgotten precious metal…With silver $Silver - main 2503(SImain)$ surging and gold $Gold - main 2504(GCmain)$ going for it, $Platinum - main 2504(PLmain)$ ’s been patient — stuck in the range, coiling into a triangle formation; waiting for its turn to breakout. And this is where it gets interesting:“I often describe silver as a combination of precious metal and industrial metal, and platinum is the same… but the weighting to industrial metal is even higher. So we probably need to see global growth sentiment heat up a bit more for this one to breakout (whi

Something very interesting is happening in the macro world right now.Central Banks have undertaken a mass-migration from hiking rates to cutting rates.Normally this type of policy pivot would only be seen as a panic response to recession, crisis, and downturns. And to be fair there are some weak spots out there, but there’s no crisis, no full blown recession, and asset markets are charging higher.Inflation has come down —there is that; so you can argue that this pivot makes sense from the standpoint of pulling back on previous panic tightening…But here’s the problem: disinflation is done.Global median inflation rates have stabilized and some measures of inflation have even begun to turn up again.And yet the rate cuts continue, with more central banks joining the movement (e.g. Australia +

In CPI adjusted terms the EURO STOXX 50 looks less impressive, albeit arguably also looks better in terms of potential upside as there remains a large distance to the historical all-time inflation-adjusted highs. The breakout in real terms also looks very compelling.Similarly, relative to the $S&P 500(.SPX)$ it's been in a 24-year relative-bear-market. There have been numerous false dawns along that path, but the recent bounce after a failed breakdown to new lows looks promising, especially after the period of relative stalemate over the past couple of years.I remain convinced that we are set to see an imminent turnaround in global vs US stocks, and this here is a key part of that story.

If you’ve been fixated on the news flow around tariffs and stuck on the old narrative that Europe is doomed and can only regulate vs innovate then you might have missed the fact that European equities are up over +10% YTD.Change is in the air, a key set of breakouts and improving technicals serve as a timely prompt to consider whether there’s more to this —and more left in the move…What’s driving the strength in European Equities:Valuations: unlike expensive US stocks, European stocks are still cheap/reasonably priced, and trade at a record low valuation discount vs US. The thing I always emphasize is that when valuations reach such extremes they have a habit of speaking for themselves; the rubber band eventually snaps back.Monetary Policy: the European Central Bank began rate cuts earlier

The chart below shows the path of US vs Chinese tech stocks. The funny thing with markets is that often the prevailing narrative is shaped more by price than anything else, and in that respect given what I outlined on narratives and perceptions above it’s probably no surprise to see the divergent paths here. $Invesco QQQ(QQQ)$ $Invesco China Technology ETF(CQQQ)$ It’s another prompt to have a rethink with regards to a possible closing of the gap in that chart (whether by China catching up or US catching down, or some combination), and also a reminder of the twists and turns in markets (i.e. they don’t just go in a straight line!).Just remember, the trend is your friend — until it bends…And things might be

We’re talking about upside in Chinese stocks (and maybe even downside in US stocks) — something which I still get the sense is a very outside-of-consensus view, and certainly jars against the mainstream media-market narrative…As a refresher the thesis basically states: valuations are cheap in China, expensive in the US, and hence we can deduce consensus as expecting great things from America and not much from China.Meanwhile on the macro, Trump 2.0 is not necessarily good for US stocks in the medium term given heightened policy uncertainty, probable contractionary fiscal policy, and a much much higher hurdle from stretched valuations and sentiment vs the last time he entered office back in 2017.As for China, they are just coming out of recession now and their property market is turning the

The monthly Market Cycle Guidebook is a key resource for investors — providing insight into the stage of the business cycle, monetary policy trends, leading indicators, earnings momentum, valuations across multiple different assets and markets, long-term return expectations, and tactical asset allocation views.Key Findings from the Latest Monthly pack:Global monetary policy settings are increasingly shifting from headwind to tailwind as inflation falls and economic cycle data remain soft.The major macro dilemma for investors at this stage is the tails; resurgence risk on the one end (growth reaccelerates, inflation resurges), and recession risk on the other end (recession takes hold, deflation comes into focus).The second coming of Trump likely exacerbates this, with a puzzling policy path