Robert J. Teuwissen

Financial service professional

    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-28 03:38

      Energy takes over from technology

      Last week, oil prices fell on recession fears. Helped by the weakening dollar, the difference between the price of petrol and the price of electricity has become so small that many hybrid motorists are better off driving on petrol (or diesel) than on electricity, a kind of reverse energy transition. German industry also sees the advantages of oil as an alternative to natural gas. Demand for oil may also get a boost when the Chinese economy opens up. Furthermore, supply is being squeezed by developments in Iran and it is hoped that components of Western oil companies will hold up in Russia this winter. Based on several variables, the outlook for energy is the best (incidentally, directly followed by basic materials mining and agriculture). The outlook for technology, until recently the market leader, is mediocre. Defensive sectors score poorly. The market seems to be gearing up for a cyclical turn, helped by the spike in inflation and the spike in interest rates. Meanwhile, US strateg
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      Energy takes over from technology
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-26

      China still the factory of the world.

      Immediately after the Chinese Party Congress, Chinese stocks were written off. Suddenly, everyone seemed intent on not investing in Chinese stocks. This is despite the fact that it was not even that long ago that China was one of the big stock market favourites. From the 2020 peak (that is, the peak prior to the corona pandemic), Chinese technology shares (KWEB) rose 100 per cent in a year. There was a euphoric mood among investors towards Chinese stocks on the first days of the Chinese New Year in 2021, immediately the time to become more cautious. In fact, the extremely negative mood towards China is now a reason to become more positive. Growth is inhibited by the zero-covid policy and the approach to the property market. In both cases, this is caused by the Chinese government and in both cases, the same government can solve this problem quickly. Instead of 2.5 per cent annual growth, which the market seems to be counting on, the Chinese economy will return to a growth path of around
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      China still the factory of the world.
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-25

      Timing of a recession

      Economists are falling over each other to correctly predict the next recession. Whenever the recession comes, it will undoubtedly be the most predicted recession ever. Yet past experience shows that predicting a recession is almost impossible to do, just as there is no good model yet to predict inflation. To predict a recession, there are several indicators. Popular is the use of the yield curve. The moment short-term interest rates are higher than long-term interest rates, the curve is inverted, an indicator of a recession. In fact, the market is being asked whether interest rate hikes are having an effect, and the moment the curve is inverted, the market is confident that inflation no longer needs to be a problem. Besides the 10-year minus 2-year, there is also the 10-year minus 3-month and the latter is just a little better at predicting a recession. But the start of a recession does not coincide with the inversion of the yield curve. There may well be some time in between. Even the
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      Timing of a recession
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-25

      The peak in inflation

      The direction of financial markets at the moment is mainly determined by interest rate movements. Whereas rising interest rates first caused price losses, falling interest rates are now causing price gains. Interest rates are falling because inflation is likely to have peaked in the United States. While inflation figures came in higher than expected throughout the year, the latest US inflation figures were less than expected. Several developments mean that inflation figures could also be better than expected in the coming months. For instance, there are clearly fewer problems in supply chains. Container transport prices have fallen sharply. The market for new cars is more balanced, with used car prices falling sharply in the US. Oil prices are also falling due to Chinese lockdowns and the impending recession. Furthermore, the housing market is highly sensitive to rising interest rates, so prices are now starting to fall there too. Following the corona pandemic earlier this year, there
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      The peak in inflation
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-21

      2023: The year of the yen

      Ten years ago, a Japanese with 10,000 yen could buy a $132 product in the United States, now a product of only $71. Conversely, Japan has become cheaper and cheaper for tourists. Ten years ago, you only got 100 yen for a euro, now it’s 145 (100 yen/141 US$). Until recently, tourists could not take advantage of this because the borders remained closed due to corona. Meanwhile, tourists are welcome again. In 2019, 32 million tourists came to Japan spending about 5 trillion yen. Next year, tourists in Japan are likely to spend 6.6 trillion yen. One of the successes of Abenomics is the annually-growing number of foreign tourists. Only corona briefly threw a spanner in the works. Instead of the planned 40 million tourists in 2020, it became 4 million. By 2030, the country is targeting 60 million foreign visitors. Time to shop in Japan. Japan has long tried to weaken the yen to boost the economy. A weaker yen would also help to push up inflation. Despite the many billions spent on buying up
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      2023: The year of the yen
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-17

      Good news = good news

      Since the meeting of central bankers in Jackson Hole in late August, good news for the economy equalled bad news for financial markets. Indeed, better-than-expected economic data meant that the central bank had to do even more to push the economy into recession in order to curb inflation. Meanwhile, there are increasing signs that such a recession is coming in the United States too, although underneath the economy remains remarkably strong. All year long, bad news dominated the stock market, with an emphasis on soaring inflation and geopolitical turmoil. Last week, the US inflation rate was finally better than expected for once (7.7% instead of 7.9%), and that caused the biggest rally in the US stock market since 2020. Over two days, for the Nasdaq, it was even the strongest rally since 2008. For European investors, not much of that remained, given the biggest loss in the dollar versus the euro since 2009. The new narrative of falling inflation (disinflation) means that the Fed may sto
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      Good news = good news
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-16

      Turn in the dollar

      While the price explosion in the US stock market last week looked spectacular, the fall in the dollar was equally spectacular. Now, there are always many different factors affecting currency developments, but the market tends to focus on just one of them. For the dollar, the main focus lately has been on Fed policy and related Federal Funds Rates. Europe started raising interest rates much later and also has much less room to raise rates given its structural (energy) problems. Japan has indicated that it wants to stick to its monetary policy and partly because of this, the yen is extremely cheap and the dollar is therefore expensive. Yet it remains to be seen whether this is the only reason why the dollar has become so strong. It could also be because of the lack of liquidity caused by the Federal Reserve's tightening policy. Even in the US government bond market, this is causing liquidity problems. That means more dollars have to be repatriated from time to time. Something similar ha
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      Turn in the dollar
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-14

      G20 in Bali

      Biden arrived in Bali yesterday for the G20 meeting. Prior to that meeting, he has a meeting with Xi Jinping. As vice president under Obama, Biden knows Xi well, only the last time he saw Xi in person was in 2017. Among other things, Biden will discuss the war in Ukraine and North Korea's missile launches with Xi. Given the tensions between the world's first and second economies, expectations surrounding this conversation are low. There is also no joint press conference scheduled after the conversation. But after years of fighting over trade, technology, human rights, and global influence, a conversation may already be seen as relaxation after earlier Nancy Pelosi brought things to a head with Taiwan. There is one point where Biden and Xi can find common ground, though, and that is on the climate crisis. Beijing has previously indicated to John Kerry at the climate conference in Egypt that it wants further talks with the US on this, something previously made impossible by the tensions
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      G20 in Bali
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-08

      False inflation expectations

      Inflation-linked bonds are bonds designed to protect the buyer against inflation. The first inflation-linked bond was issued by the Commonwealth of Massachusetts in 1780. In the 1960s, emerging markets began to issue inflation-linked loans. In 1980, the UK was the first developed market to start issuing inflation-linked loans. Several other countries followed: Australia, Canada, Mexico, and Sweden. It was not until January 1997 that Treasury Inflation-Protected Securities (TIPS) were first issued in the United States, and it is now the largest inflation-linked market worldwide. In Europe, France, and Italy in particular issue inflation linkers. Occasionally a company also comes out with an inflation linker, but the vast majority are government bonds. The operation of an inflation-linked bond is simple. The fixed coupon is paid on the principal that accrues with inflation. So, for example, a coupon always remains 2 per cent, but instead of 2 per cent over nominal 1,000, it is 2 per cen
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      False inflation expectations
    • Robert J. TeuwissenRobert J. Teuwissen
      ·11-07

      Triple twist

      Mixed signals from the FOMC and commentary from Jerome Powell caused a lot of volatility in bond and currency markets last week. In the end, the rate hikes predicted by Powell do not appear to deviate from what has already been priced in by the market. So the Fed is not doing more than previously expected. That could still change, of course, but that would have to be because there are indications of further rising inflation. The opposite is the case. All surveys of manufacturers, homebuilders, SMEs, consumers, and CEOs point to a significant slowdown in US growth. Interest rate curves are inverted, now not only for the 10-2 year but also for the 10-year minus 3-month indicator with a better track record. The leading economic indicator is also contracting year-on-year, as during every recession since the 1960s. The Fed shuts itself off from this and mainly looks back, at inflation rates and employment trends. In the past, the economy was already in recession by the time unemployment ro
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      Triple twist
     
     
     
     

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