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Johan De Silva
Posted: 01 November 2024 08:17:12(UTC)
#12

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Regard: US rates
Thrugelmir;324150 wrote:

Many of the population are experiencing a very different world to those fortunate enough to be invested in the stock market.
Peanuts;324170 wrote:
At what point do yields have a negative impact on stocks? I've heard 5% on the 10yr in US could break the equity rally.

I agree with both, but private investors should not react to these concerning views. A Trump win is being priced in by the markets, as Treasury yields rose on realisation of a red sweep in the polls weeks ago. Those voters are angry and will go out and vote. So for US markets this is priced correctly based on whats known. From history of elections and some rate cuts we should remain bullish on US stocks.
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Thrugelmir on 01/11/2024(UTC)
Wave Action
Posted: 01 November 2024 08:58:55(UTC)
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Peanuts;324170 wrote:
At what point do yields have a negative impact on stocks? I've heard 5% on the 10yr in US could break the equity rally.


100 years of history shows 6% is a major hurdle and has capped the markets. SP500 has traded an average P/E of 15 over decades. 100 / 6% bond yield = 16 so why risk cash in the markets ? Current P/E is an aggregate 22. If rates rise then valuations could fall and probably way less than 15. Markets down and usually rest of the world follows.

https://pbs.twimg.com/me...rmat=jpg&name=small

If the FED pauses and begins to cut anticipating a recession there's not much time before markets turn down. In 1995 there wasn't a recession and markets held up.

https://pbs.twimg.com/me...rmat=png&name=small

https://pbs.twimg.com/me...rmat=jpg&name=small

Markets usually recover way before recessions end. Thing is data is often revised. Could easily tell us early 2025 we're already in a recession. ?

https://pbs.twimg.com/me...at=jpg&name=900x900

https://pbs.twimg.com/me...at=jpg&name=900x900

Summary..

https://www.youtube.com/watch?v=-QKD7sThMbI
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Guest on 01/11/2024(UTC), Johan De Silva on 01/11/2024(UTC), Peanuts on 01/11/2024(UTC)
Law Man
Posted: 01 November 2024 16:44:52(UTC)
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A good prompt for discussion by OP#1, and interesting - and differing - responses.

I tend towards the views of Lyn Alden and Russell Napier. Lyn A says current conditions are more like 1940s than 1970s.

Sovereign nations carry huge amounts of Debt: USA worse than UK, with many European nations similar. A traditional way for borrower nations to ‘repay’ the Debt is ‘fiscal repression’: engineer low Interest Rates on the Debt with higher inflation, so debasing the real value of the Debt - eg IRs at 3% with Inflation at 4-5%.over years amazing how $ £ depreciate. CBS can repeat their shenanigans with QE.

Whether or not this is so, we enter difficult times with President apparent Trump and Labour. I fear some Equities (Tech?) are over priced. If IRs are held down, reliable Dividend payers could be the best bet.

I am pleased that my Equities have done well, but at present I feel content with CGT & PNL (NOT RICA or RCP) and my physical Gold. I hold no Fixed Income apart from a High Yield Debt fund churning out 8-10 % pa, although I am ready to drop that if needed. Also I hold USA & Canadian Mid-Stream O&G funds throwing out 9% pa with steady inflation linked Revenue.

In short defensive. What do other Posters think?
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4 users thanked Law Man for this post.
Thrugelmir on 01/11/2024(UTC), Johan De Silva on 01/11/2024(UTC), Guest on 01/11/2024(UTC), Martina on 02/11/2024(UTC)
Johan De Silva
Posted: 01 November 2024 16:53:29(UTC)
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Law Man

While its great you are ahead of the curve buying gold when I have only just joined that party I fear you will miss out on the liquidity driven rally in US markets... (and I would have timed gold poorly), but you are probably OK with that. Given that rates will remain high I believe this forum is not buying enough financials that would benefit from net treasury income of a higher neutral rate... a bet on something like BNKS, HSBC, ALPH, AUGM.

I am also in Canadian O&G but upstream companies (AXL and AET long term holding I trade some off).

Would love to know how Thrugelmir, Wave Action and others are positioned... they have more age behind them.
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Thrugelmir
Posted: 01 November 2024 17:20:35(UTC)
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Russell Napier is very much in the Jeremy Grantham school of thinking. Both are both historical experts when to comes to the causes and effects of financial crises. Often derided on social media. By those I classify as the belligerently ignorant. Some post GFC investors seem to believe that "This Time is Different". Why wouldn't their portfolios continue to grow at 8%, 9% or 10%, or even possibly more.

The unavoidable fact is all that debt sitting on Central Bank balance sheets has yet to find it's why back to the private markets. Commerce is going to have to compete for capital funding again in an open market place. There's no longer automatic buyers of Government bonds, Corporate debt, Retail Backed Mortgage Securities etc. Holding down borrowing rates to an artifical level.

In the US. Debt seems to be an issue that no politician wishes to address. A problem that isn't going to disappear. Just grow bigger and bigger. With a Trump win. There could be further pain inflicted on the UK.

Doesn't change how I will invest though. Good well run companies will always prosper. Though fixed interest will return to form a core part of my portfolio. As it did in the pre 2007 era.
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Guest on 01/11/2024(UTC)
Rookie Investor
Posted: 01 November 2024 17:57:52(UTC)
#16

Joined: 09/12/2020(UTC)
Posts: 2,087
Thrugelmir;324238 wrote:
Russell Napier is very much in the Jeremy Grantham school of thinking. Both are both historical experts when to comes to the causes and effects of financial crises. Often derided on social media. By those I classify as the belligerently ignorant. Some post GFC investors seem to believe that "This Time is Different". Why wouldn't their portfolios continue to grow at 8%, 9% or 10%, or even possibly more.

The unavoidable fact is all that debt sitting on Central Bank balance sheets has yet to find it's why back to the private markets. Commerce is going to have to compete for capital funding again in an open market place. There's no longer automatic buyers of Government bonds, Corporate debt, Retail Backed Mortgage Securities etc. Holding down borrowing rates to an artifical level.

In the US. Debt seems to be an issue that no politician wishes to address. A problem that isn't going to disappear. Just grow bigger and bigger. With a Trump win. There could be further pain inflicted on the UK.

Doesn't change how I will invest though. Good well run companies will always prosper. Though fixed interest will return to form a core part of my portfolio. As it did in the pre 2007 era.


The Russell Napier who said the S&P500 will drop to 400, back in 2009?

https://www.youtube.com/watch?v=lrA2O3PPY74

Surely you would also classify Russell Napier as being "belligerently ignorant"?
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Thrugelmir
Posted: 01 November 2024 21:03:09(UTC)
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Rookie Investor;324240 wrote:
Thrugelmir;324238 wrote:
Russell Napier is very much in the Jeremy Grantham school of thinking. Both are both historical experts when to comes to the causes and effects of financial crises. Often derided on social media. By those I classify as the belligerently ignorant. Some post GFC investors seem to believe that "This Time is Different". Why wouldn't their portfolios continue to grow at 8%, 9% or 10%, or even possibly more.

The unavoidable fact is all that debt sitting on Central Bank balance sheets has yet to find it's why back to the private markets. Commerce is going to have to compete for capital funding again in an open market place. There's no longer automatic buyers of Government bonds, Corporate debt, Retail Backed Mortgage Securities etc. Holding down borrowing rates to an artifical level.

In the US. Debt seems to be an issue that no politician wishes to address. A problem that isn't going to disappear. Just grow bigger and bigger. With a Trump win. There could be further pain inflicted on the UK.

Doesn't change how I will invest though. Good well run companies will always prosper. Though fixed interest will return to form a core part of my portfolio. As it did in the pre 2007 era.


The Russell Napier who said the S&P500 will drop to 400, back in 2009?

https://www.youtube.com/watch?v=lrA2O3PPY74

Surely you would also classify Russell Napier as being "belligerently ignorant"?


Do you drive your car using the rear view mirror or instead attempt to anticipate hazards that lie ahead by actually looking where you are going constantly ?
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Guest on 02/11/2024(UTC)
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