Fundamentals aren’t enough

Fundamentals have been in place for years
What’s happening on the stock market? For starters, it’s not crashing. At least not yet. This is just a small correction. So far. The set-up in December 2018 is decidedly worse on all fronts than in, e.g., December 1999 and December 2007.

Valuations are higher (P/S type of multiples), growth is lower, slack in the economy is lower (record low unemployment), productivity growth is lower and keeps getting lower by the decade, interest rates are lower (can’t fall). On top of it all debts are larger and have grown faster than at any point in history — not only in the US but all over the world.

“Never go full retard, everybody knows that”

The correction in 2008-2009 was halted prematurely due to full retard level money printing and other globally coordinated stimulus. Central bankers and politicians pulled out all the stops in order to avoid a meltdown on their watch. Instead of fixing the poblem, they ended up stimulating moral hazard and asset prices more than the economy.

Maybe there is a way to repeat the indian rope trick. Maybe the current quantitative tightening can be turned into an order of magnitude more massive money printing than last time. Will one hundred trillion dollars suffice (it was 20T this time)?


Hello Africa?

However, don’t forget that the Greenspan put was already in place ahead of both 2001-2002 and 2008-2009, and they used it, slashing interest rates at unprecedented speeds, while the largest and most solid stock markets in the world still fell by over 50 per cent.

2 nuggets
Where’s the whale? Where’s the SocGen scandal, the Madoff, the Enron, the Bear Stearns subprime miss? The August 2007 hedgefund crash? That thing that tells you it’s really over?

There are of course more or less subtle signals all over the place: high yield bonds, BBB growth, gold/DXY, FANGs, Italian bond yields, market narrowing, technical dispersion and so on. But we’re still lacking that multi billion dollar speculative loss, the ponzi scheme revelation with systemic effects. Not even -85% for Bitcoin caused more than a marginal stir.

Who has been swimming naked?

My guesses for 2019
Nota Bene: these are not recommendations. Do your research elsewhere. I am not a certified financial advisor (anymore)

* Stocks keep falling
* Sell the rips, don’t buy the dips
* Gold treads water but might be gaining upward momentum. Either way there’s no use waiting for the ultimate bottom if it means gambling away a 5x upside to get a 20 per cent discount.
* Don’t forget about soft commodities if you like to trade. Corn maybe? Coffee. Covfefe?
* Central bankers turn dovish, which only makes investors more cautious
* Cyclicals, ETF holdings, large caps, companies with negative cash flows, tech stocks crash.
* Some banks in some regions fare better than other sectors owing to below P/B=1 valuations and too big to fail policies firmly in place. Nordea anyone?

My most humble regards,


P.S. Check out the song “Jump” by Astrid S if you”re looking for an upbeat pop song
Karriär- och Finansklubben i “25 minuter” har uppdaterats med mina tankar (7 minuter ljudfil) om vad Fed egentligen signalerade i onsdags. Jag tror Powell var för dovish för marknaderna

Du kan hitta filen här


Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.