Rudi’s point of view: is the message safe?
Always independent thinker, Rudi did not hesitate to make big predictions out of consensus which proved to be correct thereafter. When Rio Tinto shares broke above $ 120, he wrote that investors should sell. In mid-2008, he warned investors not to hold shares in oil producers. In August 2008, he predicted that the biggest sell-off in commodities stocks was about to follow. In 2009, he suggested Australian banks were a great buy. Between 2011 and 2015, Rudi consistently argued that investors would be better off avoiding exposure to commodities and commodity stocks. After GFC, he devoted his research to finding artists in all weather. See also “All-Weather Performers” on this site, as well as the Special Reports section.
Rudi’s point of view | 10:00 AM
In this week’s weekly previews:
-Is the message safe?
– Conviction appeals
– Search to download
By Rudi Filapek-Vandyck, editor-in-chief FNArena
Is the message safe?
Not so long ago, stock markets were dominated by the idea that everything old had to be brand new again, with economic growth and rising inflation fueling expectations of much higher bond yields and the rapid comeback. “value” stocks and cyclical stocks. while the quality and growth were deemed grossly overvalued, on the verge of a heavy downward punishment.
This is not the scenario we saw unfold after March.
Despite sometimes excessive volatility, the whiplash market of 2021 redirected the underlying momentum towards quality, growth and stable defenses, severely testing the conviction and resilience of those who have moved all-in with the trade in previously so popular reflation.
Ten-year government bond yields should have been on track to reach 2% by now, but they fell to 1.25% in the US last week and remain well below 1.50%. As bond yields remain the primary driver of direction in other markets, including forex and equities, it goes without saying that bond non-compliance has sparked heavy debates around the world about what exactly is happening.
Below are the views and assessments of some experts who never bought into the majority opinion that dominated financial markets earlier in the year. Since these alternative views have proven correct to date, investors might at the very least want to consider their merits and validity in light of recent market movements.
David Rosenberg: Tell them they’re dreaming!
David Rosenberg, who now heads his own research and consultancy firm Rosenberg Research, believes today’s Great International Debate simply reflects how economists and market players get lost in tiny details that will lose all meaning in time. desired. Instead, Rosenberg suggests, investors should focus on the big picture: What is the bond market telling us?
Nothing is more liquid than US Treasuries, Rosenberg points out, adding: No security other than the long bond has all the information investors need about inflation, growth and fiscal policy. So the question is not whether bonds are “expensive”, or in a “bubble”, or overbought / oversold in the short term, and so on; instead, investors should listen to the message the bond market is signaling.
Despite numerous attacks on central bank policies aimed at distorting bonds and other asset markets, Rosenberg points out that recent history shows that bonds continue to provide important signals to investors. This signage was as valid at the start of 2021 as it is today. This should be the goal of investors, not whether bonds should be lower / higher or precisely where they are trading today.
Useless today, the message of the link has changed.
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