In the past six years, French Government ten-year bond yield has jumped from negative 0.3 per cent to 4.9 per cent, the highest level in 24 years. Investors are starting to differentiate between each euro-denominated country with German and Dutch ten-year bonds yielding 3.5 per cent and 3.6 per cent, respectively. Meanwhile, Greek and Italian ten-year bonds yield 4.55 per cent and 4.65 per cent, respectively, indicating potential contagion as confidence appears to be in short supply. Continue…

by David Buckland Posted in Economics, Editor's Pick, Feature Article, Global markets, Insightful Insights, Investing Education, Market commentary.

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Independent economic research and investment strategy firm Variant Perception (VP) has shared its latest market musings, and the phrase “generational equity top” got a run.

The equal-weighted Value Line Arithmetic Index is drawing down from its August high, while the Nasdaq 100 is rallying… Continue…

by Roger Montgomery Posted in Editor's Pick, Global markets, Insightful Insights, Market commentary.

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For decades, the 60/40 Balanced Portfolio was zealously and even religiously adhered to. The fixed income component was the dependable anchor, providing a steady yield, protection against stock market volatility, while allowing investors to sleep soundly at night.

More recently, bond returns have given sleeping investors a rude awakening.

U.S. analyst Ben Carlson recently highlighted this shift, pointing out that modern bondholders have endured a catastrophe, describing the market as “…the most brutal bond market in modern finance history,” adding, “It’s no wonder bonds are the most hated asset class in the world.” Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Feature Article, Global markets, Insightful Insights, Investing Education, Market commentary.

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In the stock market, equity analysts are typically bottom-up researchers. That means they start their analysis of an individual company with specific financial metrics and fundamentals, rather than macroeconomic trends or overall industry outlooks.

Instead of starting with Gross Domestic Product (GDP) growth, interest rates, or sector tailwinds, a bottom-up analyst focuses on a company’s internal strengths, business model, and valuation.

A problem arises because modelling a specific company using the bottom-up approach occurs in a vacuum. 

Analyst A assumes Company A will take market share away from Company B. Analyst B assumes Company B will hold its market share and grow sales by 10 per cent. Analyst C assumes Company C will benefit from lower commodity prices, while Analyst D assumes the commodity producer will raise prices. Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Energy / Resources, Global markets, Insightful Insights, Market commentary.

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The narrative surrounding global equities is subtly shifting. Once dominated by momentum-driven optimism, especially for artificial intelligence (AI), today’s market discussions instead focus on structural frictions.

The most bullish equity strategist of note is U.S. researcher Edward Yardeni, whose Fabulous Earnings Momentum (FEMO) thesis has driven his estimate for the S&P500 to reach 8,400 – 10 per cent higher than where we are today. Originally, this target was slated for the end of 2026, but now Yardeni has moved it to the middle of next year.

He notes the recalibration isn’t a reassessment of FEMO, but an acknowledgement of macro headwinds that limit immediate price to earnings (P/E) multiple expansion. Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Insightful Insights, Investing Education, Market commentary, Popular.

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I joined Jess Maguire yesterday afternoon on ABC Statewide Drive to discuss the sharp fall in the Australian share market, rising U.S. bond yields and the pressure higher rates can place on asset prices. We also discussed inflation and interest rates in Australia, before looking at the risks of company forecasts in isolation and why the combined growth expectations for the artificial intelligence (AI) sector may be difficult to achieve.

Listen from 1:46:38 on ABC Statewide Drive.

by Roger Montgomery Posted in Economics, Insightful Insights, Market commentary, Market Valuation, Radio, Technology & Telecommunications.

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I joined Andrew Geoghegan on Ausbiz to discuss persistent inflation in the U.S., the impact of rising wages and services costs, and why the Federal Reserve may have limited room to ease rates. We also explored the artificial intelligence (AI) infrastructure buildout, growing demand for capital and the pressure higher borrowing costs could place on hyperscalers, before discussing how private credit may fit within a higher-inflation environment. Continue…

by Roger Montgomery Posted in Economics, Editor's Pick, Global markets, Insightful Insights, Market commentary, Market Valuation, TV Appearances.

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Australia’s housing market is under growing pressure, and further declines in property values could affect more than just homeowners. The consequences could extend across household finances, consumer confidence and state government budgets.

If the value of Australia’s 11 million dwellings decline by an average 15.5 per cent from its A$12.8 trillion peak, then up to A$2.0 trillion in paper wealth could be wiped out over the 2026-2027 period. Based on averages, a dwelling worth $1.16 million at its peak could fall below $1.0 million. This fall in value would equate to a decline of $70,000 per Australian in housing wealth. Continue…

by David Buckland Posted in Consumer discretionary, Economics, Editor's Pick, Insightful Insights, Market commentary, Property.

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