Global Markets Investor

Global Markets Investor Substack analyzes financial market trends, US economy health, Federal Reserve decisions, and investment strategies in diverse market conditions. It offers insights into stock market behaviors, effect of monetary policies on markets, and assesses potential economic threats like US debt and consumer financial strain.

Financial Market Trends US Economy Health Federal Reserve Policies Investment Strategies Stock Market Analysis Economic Indicators Debt and Inflation Consumer Finance Interest Rates Market Volatility

The hottest Substack posts of Global Markets Investor

And their main takeaways

The US national debt reached $34.5 trillion, an all-time record, but does it actually matter?

39 implied HN points • 07 Mar 24
💰 Finance Debt Economy Investments Taxes Monetary Policy
  1. The US national debt has reached a record $34.5 trillion, increasing by $1 trillion every 100 days since June. This high level of debt poses challenges for the government and future generations.
  2. The US debt-to-GDP ratio is currently at 123.7%, near the all-time high. A high ratio decreases a country's ability to pay back debts and could lead to default or inflation-adjusted losses for investors.
  3. A country with a debt-to-GDP ratio above 130% historically has a high probability of default. High debt levels can limit future investments, impact economic growth, and reduce flexibility in responding to crises.

The Fed left rates steady as expected at 5.50%, stocks and gold at all-time highs

19 implied HN points • 21 Mar 24
💰 Finance Monetary Policy
  1. The Federal Reserve kept interest rates steady at 5.50% and foresees 3 cuts in 2024. First cut likely in June despite some inflation increase.
  2. The Fed plans to slow down the balance sheet reduction pace in the upcoming year, affecting market movements positively.
  3. Market reaction to the Fed's decisions saw all-time highs for stocks and gold, with bonds and cryptocurrencies rallying, and a drop in US dollar and VIX index volatility.

Why the market has really rallied following the Fed decision?

79 implied HN points • 14 Dec 23
💰 Finance Markets Federal Reserve Interest Rates Inflation
  1. The market rallied significantly after the Federal Reserve made unexpected decisions, like not pushing back against expected interest rate cuts and adjusting interest rate forecasts significantly.
  2. Investors were surprised by the Fed's dovish shift towards easing and the embrace of soft landing strategies, which resulted in market excitement and continued rallies in stocks and bonds.
  3. While the market is currently optimistic due to the Fed's stance, there are warnings about potential overbought conditions and the need to watch out for sharp corrections.

How to identify distress in the financial system?

39 implied HN points • 26 Jan 24
💰 Finance Bonds Stocks Volatility Resilience
  1. It's crucial to understand the credit rating scale of bonds to identify distress in the financial system, as issues in the bond market can quickly impact other financial sectors.
  2. Monitoring indicators like bond spreads, such as the ICE BofA US Corporate Index Option-Adjusted Spread, can help determine the financial system's strength. Lower spreads usually indicate a healthier market.
  3. Using indices like the St. Louis Fed Financial Stress Index offers a comprehensive view of financial market stress, incorporating various metrics like interest rates, yield spreads, and stock and bond volatility.
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Top 5 financial posts of the trading week 8/2024

19 implied HN points • 26 Feb 24
💰 Finance Investing Market Trends Economic Indicators Stock Market Bonds
  1. Weekly performance update: Last week saw significant increases in major US indexes, VIX volatility, Bitcoin, and gold. Nvidia stood out with a 9% rise after surpassing earnings and guidance expectations.
  2. Nvidia's remarkable growth: Nvidia's market cap doubled to $2 trillion in just 8 months, making it the third largest US company. Its outstanding revenue forecast and stock performance pose a question about its future success.
  3. Chinese market support and US bank debts: Chinese authorities are propping up their stock market, while major US banks are facing challenges with bad property debt surpassing loss reserves. Keep an eye on US government bond yields and PCE inflation data for potential impacts on various markets.

Is the US economy heading for a soft landing? Part 1/2

59 implied HN points • 17 Dec 23
💰 Finance Economic Forecasting Banking Sector Consumer spending Interest Rates
  1. Soft landing in the US economy refers to a scenario where interest rates increase without causing a recession. Achieving a soft landing is challenging due to the unpredictable effects of rising rates.
  2. Current economic indicators suggest a potential slowdown, with data like US bank lending growth declining and bankruptcy filings increasing. These factors could lead to significant economic problems if extended.
  3. Consumer spending in the US may face limitations, as issues like high credit card debt and rising delinquencies pose risks. The Federal Reserve's actions regarding interest rates could impact future economic outcomes.

The US labor market is much weaker than we have been told

7 HN points • 15 Mar 24
💰 Finance Economic Trends
  1. The US labor market is weaker than portrayed in headlines, with data revisions indicating lower job growth than initially reported.
  2. There has been a rise in part-time jobs and multiple jobholders, while full-time jobs have decreased, presenting a concerning trend for the US economy.
  3. Analysis of native vs foreign-born employment shows a significant difference, indicating that job creation in the US has been largely driven by immigrants in recent years.

Top 5 financial posts of the 4/2024 trading week

19 implied HN points • 28 Jan 24
💰 Finance Stock Market Cryptocurrency Investment Analysis
  1. The S&P 500 ended near its highest point, driven by big Tech, while Tesla saw a significant drop. The Federal Reserve was meeting, and important tech companies like Apple and Amazon were set to report earnings.
  2. Bitcoin faced volatility after ETFs approval, dropping momentarily but stabilizing above $40,000. The future of Bitcoin's market trends remains uncertain.
  3. Chinese stocks have not performed well in the past decade, with the US stock market value surpassing China and Hong Kong combined. Despite looking cheap, investing in China carries significant risk during a potential bear market.

A pullback in the S&P 500 has likely not finished yet

19 implied HN points • 08 Jan 24
💰 Finance Stock Markets Investing Economy Market Analysis
  1. The S&P 500 pullback is likely not over yet, with factors like Apple stock's decline and bond yields indicating further decreases.
  2. US bond yields, the US dollar, and the Fear & Greed index suggest that the S&P 500 decline may continue.
  3. Indicators like the percentage of stocks trading above their 50-day moving averages and the VIX levels point towards a possible S&P 500 decline still in progress.

Is the US economy heading for a soft landing? Part 2/2

19 implied HN points • 21 Dec 23
💰 Finance Economy Market Analysis Recession Inflation Labor Market
  1. The US economy shows signs of avoiding a recession through strong GDP growth, tracked through economic nowcasts.
  2. Retail sales and inflation rates support a soft landing scenario, with consistent growth and falling inflation.
  3. The labor market strength, with healthy wage growth and low unemployment rates, indicates resilience in the US economy.

Why the Fed fears cutting interest rates too soon

0 implied HN points • 08 Feb 24
💰 Finance Monetary Policy Inflation Interest Rates Economic History
  1. The Fed fears cutting interest rates too soon due to concerns about a potential inflation resurgence similar to the 1970s.
  2. The Federal Reserve in the 1970s under Arthur Burns made a significant policy mistake by cutting interest rates too soon, leading to high inflation rates later.
  3. Lessons from history emphasize the importance of not cutting interest rates prematurely, and the Fed is cautious about considering rate cuts until more data is available to assess inflation and economic indicators.

Top 5 financial posts of the 5/2024 trading week

0 implied HN points • 04 Feb 24
💰 Finance Investing Stock Market Economy Bonds
  1. Stock market saw significant gains after earnings reports from Meta, Amazon, and Apple, along with positive US non-farm payrolls data
  2. Low S&P 500 hedging cost and VIX trading at low levels suggest market euphoria, but any negative surprises could lead to a rapid spike in VIX
  3. Global liquidity cycles impact stock markets, but even in times of liquidity, bear markets can occur during significant adverse events like financial crises or pandemics

Top 5 financial posts of the trading week 10/2024

0 implied HN points • 11 Mar 24
💰 Finance Investing Market Analysis Economic Indicators Stock Market
  1. The performance of major US indexes, Bitcoin, and gold, with insights into market volatility and inflation data, was a focus for the week.
  2. Federal Reserve Chair Jerome Powell's approach to rate cuts, inflation measures, and the impact on the market were discussed in the post.
  3. A comparison of the US economy's strength with that of the European Union, UK, Japan, and China, highlighting the support provided by the US central bank and government.

Is Gold heading towards $2,500?

0 implied HN points • 17 Jan 24
💰 Finance Investing Gold Interest Rates Economy Assets
  1. Owning gold can be beneficial during uncertain economic and geopolitical times as well as when interest rates are low - except during liquidity crises.
  2. The relationship between gold prices and the real 10-year yield is important to monitor, as high real interest rates may make holding gold more expensive.
  3. In 2024, the potential scenarios for gold's price include a base case where rates go down, a bullish case with significant rate cuts, and a bearish case with stubborn inflation.

Top 5 financial posts of the 2/2024 trading week

0 implied HN points • 13 Jan 24
💰 Finance Investments Stocks Economy Markets Bankruptcy
  1. Trading week recap: Large-cap stocks like Tech were up, while smaller caps fell. Bitcoin also dropped post approval of 11 spot Bitcoin ETFs.
  2. US credit-card delinquency rates at a decade high, showing ongoing weakness in consumer spending.
  3. S&P 500 expected volatility low, making stock market hedging cheaper. Magnificent Seven tech giants have market caps larger than most global stock markets.

Don't be fooled by Wall Street analysts

0 implied HN points • 28 Dec 23
💰 Finance Investing Stock Market Forecasting Financial Analysis Economic Trends
  1. Wall Street analysts have consistently missed S&P 500 year-end targets by an average of 15.7% from 2018 to 2023.
  2. It's hard for even the most renowned financial firms to predict exact stock market values, showing the importance of personal research.
  3. Despite sophisticated analysis, Wall Street analysts often get S&P 500 projections wrong, emphasizing the value of independent thinking in investment decisions.

Top 5 financial posts of the 3/2024 trading week

0 implied HN points • 20 Jan 24
💰 Finance Investing Markets Stocks Economy Personal Finance
  1. The S&P 500 reached its all-time high while small-caps lag behind, gold and bitcoin are consolidating, waiting for the next trigger.
  2. A significant wealth gap exists, with the top 10% of Americans owning 93% of all stocks, highlighting the importance of financial education.
  3. Inflation has driven up food prices by over 25% since 2019 in the US, questioning whether incomes have similarly increased.

Are US technology stocks in a new bubble?

0 implied HN points • 04 Apr 24
💰 Finance Stock Market Investing Valuation Tech Stocks
  1. The analysis of US technology stocks being in a bubble is crucial as historical data showed the tech sector's previous dramatic drop, which took over 15 years to recover from, making it a significant risk for investors.
  2. The current market scenario, with factors like Quantitative Easing and heavy government intervention, makes a complete repeat of the past bubble unlikely. However, even a 20-30% drop could be painful for investors, given the high levels of capital at risk.
  3. US households now hold nearly 50% of equities in their portfolios, similar to the levels seen in the early 2000s, raising concerns about the amount of capital exposed. Examining historical measures and leading indicators will be key to determine if US tech stocks are overvalued or in a bubble.

Are US consumers' finances seriously stretched?

0 implied HN points • 28 Mar 24
💰 Finance Economy Consumers GDP Recession
  1. US consumers' finances are a significant factor in the country's economic health, with personal consumption expenditures accounting for a large portion of the GDP.
  2. There is concern over a potential weakening of US consumers' financial situation and its impact on economic growth.
  3. It is important to analyze the data and trends to understand the reality of the US economy and the potential future implications.

Top 5 financial posts of the trading week 11/2024

0 implied HN points • 18 Mar 24
💰 Finance Investing Stocks Bonds Economy Markets
  1. The US stock market held up well despite higher-than-expected inflation data last week, with Small Caps underperforming. This week's focus is on the upcoming Fed meeting on Wednesday.
  2. The S&P 500 index has been holding a wedge pattern for several months, and currently, it shows a positive trend, up by 1%.
  3. Bankruptcy filings in the US have decreased compared to 2023, but there have been 29 global defaults year to date, the highest since the Great Financial Crisis.

How to construct an investment portfolio in different inflation regimes

0 implied HN points • 01 Mar 24
💰 Finance Investing Inflation Asset Classes Economic Indicators
  1. Stocks perform best in falling and stable inflation; commodities and precious metals perform well in rising inflation.
  2. During periods of falling inflation, stocks are favored, followed by bonds and real estate. Commodities tend to be the worst performers.
  3. In stable inflation environments, stocks still play a significant role, while real estate, bonds, commodities, and precious metals are also included in the portfolio.

What if the Fed does not cut rates this year and hikes instead?

0 implied HN points • 22 Feb 24
💰 Finance Economy Interest Rates Inflation Investors
  1. Market investors and traders are starting to consider the possibility of a rate hike by the Federal Reserve instead of a rate cut this year due to stubborn inflation data.
  2. Recent market reactions show a significant shift in expectations, with traders now expecting 3 to 4 interest rate cuts in 2024 compared to the initial expectation of over 7 cuts.
  3. There is now a notable risk in the market as some investors are beginning to hedge against the possibility of an interest rate hike, which could lead to turbulent times if inflation data continues to surprise on the upside.

Top 5 financial posts of the trading week 7/2024

0 implied HN points • 19 Feb 24
💰 Finance Investment Stocks Economy Federal Reserve Global Markets
  1. The S&P 500 closed negatively after a strong streak due to inflation data - investors await the Federal Reserve Meeting Minutes and S&P Global Services PMI data.
  2. Watching stock behaviors like Super Micro Computer's quick rise and subsequent 20% drop is a valuable lesson in market realities and risks.
  3. Market expectations on Fed interest rate cuts have significantly shifted due to economic data and inflation, with potential talks of future rate hikes pointing to significant market reactions.

25% of the world is either in recession or is going through an economic stagnation

0 implied HN points • 16 Feb 24
💰 Finance Global Economy Recession Central Banks Interest Rates
  1. About 25% of the world is facing recession or economic stagnation, impacting major economies like Japan, United Kingdom, Eurozone, Canada, among others.
  2. Countries such as Japan, UK, Denmark, Moldova, and Peru are in recession, experiencing economic decline over quarters.
  3. Economies in stagnation include the Euro Area, Germany, Canada, Sweden, and Saudi Arabia, facing challenges due to factors like interest rates, inflation, and oil production cuts.