What Options for Buffett Who Has $90 Billion To Invest?

Short answer:  Not Many.

Facts: Cash & cash equivalents at Berkshire Hathaway (BRK) reached $116 billion at the end of 2017, compared with $86.4 billion at the start of the year. Per Morningstar’s Gregg Warren estimates, Buffett finds himself with « around $90 billion in dry powder that could be committed to investments, acquisitions, share repurchases and dividends. » Continuer la lecture de « What Options for Buffett Who Has $90 Billion To Invest? »

Rising Real Yields Are the Real Threat

https://pixabay.com/en/dollar-american-currency-money-17527/
Source: Pixabay

Deutsche Bank’s strategist team published a report to figure out what’s currently priced in by financial markets after the bout of volatility. Rising real yields are a clear threat to the rebound in equity market. But having recently talked to fund managers in other asset classes, real yields are a threat to many asset classes where lots of money have flown other the last years (EM debt for instance).

Here’s DB’s take on European equities:

Continuer la lecture de « Rising Real Yields Are the Real Threat »

Putting Recent Market Sell-off in Perspective

Source: Pixabay

Markets have been unnerved by rising interest rates in the US, with ripple effects around the world. The most staggering event has happened on the VIX market with a number of funds/ETNs making the headlines after having lost tons of money. What should investors take from these events ? A couple of reflections and interesting comments seen here and there. Continuer la lecture de « Putting Recent Market Sell-off in Perspective »

Things That Could Help European Stocks Break Out… Or Not – JPMorgan

JPMorgan’s equity strategist team has published a report today trying to figure out if European stocks will finally break out the glassdoor of 400 points (for Stoxx Europe 600) that they have been hitting 3 times already (2000, 2007, 2015).

They argue that this time might be the time, IF a number of conditions are successfully met. Among them, earnings recovery, operating leverage, decent (!) valuations and direction of bond yields are important factors to consider. Big swing factor are FX.

Continuer la lecture de « Things That Could Help European Stocks Break Out… Or Not – JPMorgan »

Markets Keep Going Up. Where Are the Risks ?

Rule of thumb: the more expensive a financial asset is, the lower its prospective return. That’s simple. But sentiment and markets can become and stay irrational longer than investors can stay solvant, they say. So if you cannot predict when the markets will turn, it’s probably better to check where the risks are and monitor them the best you can. And invest with a margin of safety. Always…

Continuer la lecture de « Markets Keep Going Up. Where Are the Risks ? »

Are We on The Verge of Final Melt-Up Before the Next Krach ? Jeremy Grantham Thinks So

According to Investopedia a « melt-up » is a « A dramatic and unexpected improvement in the investment performance of an asset class driven partly by a stampede of investors who don’t want to miss out on its rise rather than by fundamental improvements in the economy. »

This is exactly what could happen to financial markets, according to veteran value investor Jeremy Grantham. Continuer la lecture de « Are We on The Verge of Final Melt-Up Before the Next Krach ? Jeremy Grantham Thinks So »

Unibail Rodamco-Westfield: 2 Views from the same Broker

Unibail Rodamco (UL) announced a friendly takeover offer for Australia-based Westfield (WFD) in a deal that values the Australian mall operator at c$25 bn (on EV basis).

Interestingly, Bank of America Merrill Lynch has analysts covering both companies. Following the transaction, the team covering UL has maintained its Buy rating while the one covering Westfield has moved to « Not Rated », arguing that « WFD is no longer trading on the basis of fundamentals. » Continuer la lecture de « Unibail Rodamco-Westfield: 2 Views from the same Broker »

JPMorgan Expects Double Digit Earnings Growth in 2018 Globally

« Global earnings look set to deliver double digit growth this year, at 12%, the best since 2010. The strength was broad based, with all the key regions contributing, and largely driven by Cyclicals and commodities. As base effects are turning less favorable, the question is whether earnings will remain a support for equities into 2018. »

This is the opening statement and a rather bullish intro to a report published today by JPMorgan’s strategists Mislav Matejka, Emmanuel Cau, Prabhav Bhadani and Aditi Balachandar. Continuer la lecture de « JPMorgan Expects Double Digit Earnings Growth in 2018 Globally »

In The Mood for TIPS – BofAML

Investors are getting nervous about inflation. Per BofAML « Flow Show » weekly report released today, TIPS recorded their 3rd highest weekly inflows (chart) while getting out of High Yield ($9.8 bn outflows over past 4 weeks). With $1.2bn, it’s one of the highest level of inflows since Nov 2016.

Source: Bank of America Merrill Lynch

What Signals A Bear Market ?

Bear markets (BM) are painful. Since the 50s, US bear markets have resulted in an  average loss of 31% (most painful were Oct-07 at 57%, Mar-00 at 49% and Jan-73 at 48%).

Of course, timing the market is futile and doesn’t help the investor over the long run. It’s more important to have a clear view on the value of any financial asset and seize it when it trades with a margin of safety.

But understanding the market dynamics and the financial environment might be helpful, especially if you want to be able to take advantage of the next downturn.

Goldman Sachs published an in-depth report on the characteristics of bear markets and what signals investors should track to try and anticipate them.

Continuer la lecture de « What Signals A Bear Market ? »