Global markets

While bubble definitions abound, most fall into two camps: those that measure overvaluation and those that observe the behaviours and conditions that typically give rise to it.

The most straightforward definition of a bubble is asset prices climbing far above some measure of value, such as earnings, dividends, gross-value-added (GVA) or discounted cash flows. Robert Shiller’s famous CAPE ratio, which compares stock prices to long-term average earnings, and John Hussman’s market-cap-to-GVA, were designed to flag these distortions. continue…

by Roger Montgomery Posted in Global markets, Insightful Insights, Investing Education, Market commentary.

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Outgoing U.S. Federal Reserve Chair Jerome Powell’s recent remarks have sparked debate. Speaking at the National Association for Business Economics conference on October 14, Powell hinted that the Federal Reserve’s (the Fed) long-running quantitative tightening (QT) program – its methodical unwinding of the balance sheet bloated by pandemic-era stimulus – may be “coming into view” for an end.

While perceived as a relief for many equity investors, halting QT might not actually be the good news equities investors are hoping for. continue…

by Roger Montgomery Posted in Foreign Currency, Global markets.

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We are in very unique times. In 1963, the late Sydney Homer published the first edition of his book A History of Interest Rates. Covering 4000 years of interest rate history, and now in its fourth edition, the book has become a classic in the fields of finance and economics. 

Nowhere in Homer’s pages however do you ever read zero interest rates.

So that is how extraordinary and abnormal the last 10 years has been. Human history has not hitherto experienced the zero interest rates we have all now experienced in the last decade or so. continue…

by Roger Montgomery Posted in Foreign Currency, Global markets, Market commentary.

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In the past 14 months, the Reserve Bank of New Zealand (RBNZ) has cut its cash rate on seven separate occasions by an aggregate 3.0 per cent from 5.5 per cent to 2.5 per cent, as seen in Table 1.

Table 1. Reserve bank of New Zealand rate cuts continue…

by David Buckland Posted in Global markets, Market commentary, Property.

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continue…

by David Buckland Posted in Economics, Global markets, Video Insights.

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Central banks across the Western world have been busy recalibrating policy settings, with interest rate cuts a common theme over the past 12-15 months. But the reasons for these moves, and the consequences, vary widely between economies. In the following analysis, I examine the recent cash rate changes across Australia, the U.S., the UK, Europe, Canada, and New Zealand, and place them in the context of each nation’s inflation and unemployment trends. Together, these snapshots highlight the mixed progress in taming inflation, the trade-offs being made, and the signals for both savers and borrowers in the year ahead.

I have tabled the cash rate movements from the Central Banks of these six Western World economies, accompanied by some brief economic observations. continue…

by David Buckland Posted in Economics, Global markets.

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This U.S. summer, a new investment frenzy – akin to the SPAC (Special Purpose Acquisition Company) exuberance of 2020/21 – has gripped Wall Street as companies transform their balance sheets into crypto vaults. And as September unfolds, the corporate dash into cryptocurrencies shows no signs of slowing.

From Japanese hotel operators to chipmakers, tech startups, and legacy manufacturers, they have all funnelled tens of billions into Bitcoin and altcoins, reimagining their cash reserves as bets on digital assets. continue…

by Roger Montgomery Posted in Digital Asset Funds Management, Global markets, Market commentary.

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CrossBorder Capital’s latest report by founder Michael Howell paints an ominous picture of a maturing global liquidity cycle, raising concerns that the U.S. Federal Reserve’s (the Fed) waning role in providing liquidity (the fuel for market and asset rises) has negative implications for markets and the U.S. economy.

Howell’s analysis concentrates on the September Federal Open Market Committee (FOMC) meeting, where a 25-basis-point rate cut was delivered alongside hints of further cuts, consistent with Trump’s demands. Yet, he labels this a “hawkish cut,” emphasising the Fed’s tough stance on liquidity. Fed Chair Jerome Powell, incoming appointee Stephen Miran, and Treasury Secretary Scott Bessent are reportedly aligned in their push to shrink the Fed’s balance sheet and minimise its market influence. continue…

by Roger Montgomery Posted in Global markets, Market commentary.

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Anecdotal evidence. Dismissed as mostly irrelevant, anecdotal evidence becomes useful often only in hindsight. Until then, it’s a novelty, statistically unsound, unreliable, lacking objectivity and unverifiable.

But boy, it’s fun to inquire.

That was then

In the 1920s, the stock market was ‘roaring’, enjoying widespread optimism and even euphoria amid new innovations. On October 15, 1929, after the market had experienced a nine-year rise, the first celebrity Yale economist, Irving Fisher, gave a speech in New York City. continue…

by Roger Montgomery Posted in Global markets, Market commentary.

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Last week, The Wall Street Journal (WSJ) published a piece commenting on the artificial intelligence (AI) infrastructure frenzy. As an investor, one can’t help but be awestruck while also feeling concern and a more than a hint of déjà vu.

According to the WSJ, Ellendale, North Dakota, is a sleepy town of just 1,100 now playing host to a half-built AI data centre that’s will be larger than 10 Home Depots – the U.S. equivalent of a large format Bunnings Warehouse here in Australia. continue…

by Roger Montgomery Posted in Global markets, Market commentary, Technology & Telecommunications.

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