Reuters (August 22)
The “boom-to-bust saga” of China Evergrande Group drew closer to the end with its formal “delisting from the Hong Kong stock exchange on Monday,” which as the largest by market value and volume in recent years.” For investors, “the journey has been anything but grand.” After achieving a $9 billion market cap in its 2009 IPO, Evergrande rocketed ahead, growing “more than five-fold to $51 billion eight years later only to plummet to earth,” with it’s current value approximately $282 million and creditor claims of approximately $45 billion. “The company’s journey from stock exchange darling to a pariah in the financial markets is a cautionary tale of unbridled debt-fuelled expansion in the world’s second-largest economy.”
Tags: Boom, Bust, Cautionary tale, China. Evergrande, Creditor claims, Debt-fuelled, Delisting, Expansion, Hong Kong, Investors, IPO, Market value, Pariah, Stock exchange, Volume
Barron’s (August 14)
“Investors have typically penalized emerging markets such as Turkey, Argentina, and China due to concerns about the independence of the central bank, government intervention in the private sector, and rampant overspending.” Now these concerns are focused on “the U.S., which has historically been the paragon of a developed market.” Investors are reevaluating “the premium that U.S. assets have long commanded” and this could lead to “weaker long-run returns for stocks or, more immediately, higher bond yields and a continuation in the weakness of the dollar that has emerged this year.”
Tags: Argentina, Bond yields, Central bank, China, Developed market, Emerging markets, Government intervention, Independence, Investors, Overspending, Paragon, Penalized, Premium, Private-sector, Rampant, Reevaluating, Returns, Stocks, Turkey, U.S. assets
The Economist (July 31)
“America’s biggest technology companies are combining Silicon Valley returns with Ruhr Valley balance-sheets. Investors who bought shares in Alphabet, Meta and Microsoft a decade ago are sitting on eight times their money, excluding dividends.” Their hard assets multiplied with data center investment and their property, plant and equipment is now “worth more than 60% of their equity book value, up from 20%” a decade ago. Even more eye popping, combined with Amazon and Oracle, their capex spending is estimated to account “for a third of America’s economic growth during the most recent quarter.”
Tags: Alphabet, Amazon, Balance sheets, Book value, CAPEX, Data centers, Dividends, Eye-popping, Hard assets, Investors, Meta, Microsoft, Oracle, Returns, Shares, Silicon Valley, U.S.
Barron’s (July 19)
“This market risk is a slow-motion wreck waiting to happen.” And yet the U.S. market remains sanguine, largely tuning “out the past week’s tariff drama.” Freya Beamish, Chief Economist at TS Lombard, is “cautioning investors against complacency because multiple ‘low-grade shocks’ can take their toll like that of a frog in boiling water.” The impact of tariffs, deportations and “the series of low-grade shocks the market is struggling to digest” will eventually appear and “investors may be underestimating their impact on inflation.”
Tags: Beamish, Boiling water, Chief economist, Complacency, Deportations, Frog, Inflation, Investors, Low-grade shocks, Market risk, Slow-motion wreck, Tariffs, TS Lombard, U.S.
Wall Street Journal (July 12)
“Would Tariff Man please take a summer vacation for the good of the nation? Stocks tumbled on Friday after President Trump announced he will raise tariffs on Canada to 35%, starting Aug. 1.” Following this, Trump “floated increasing his current 10% across-the-board tariffs on many countries to 15% or 20%.” Tarriff Man “seems to think that his unpredictability is a negotiating advantage. But keeping trading partners guessing—along with investors and U.S. companies with global supply chains—isn’t a recipe for economic strength.”
Tags: 35%, Advantage, Canada, Companies, Economic strength, Investors, Negotiating, Stocks, Summer vacation, Supply chains, Tariff Man, Trading partners, Trump, Tumbled, U.S., Unpredictability
Reuters (July 3)
“Big investors are mobilising to trade through weeks packed with wild-card events that may shatter the calm in stock markets and drive big swings for assets they see as exposed to both positive or negative surprises, from gold to corporate credit.”
Tags: Assets, Big swings, Calm, Corporate credit, Exposed, Gold, Investors, Negative, Positive, Shatter, Stock markets, Surprises, Trade, Wild-card events
Fortune (July 1)
“Consumer spending is weakening. The job market is getting worse for workers. And U.S. stock investors are loving it. The S&P 500 rose 0.52% yesterday, hitting an all-time high for the second day in a row.” The surging market suggests “investors don’t anticipate anything dramatic like a mass selloff.” Their optimism seems to be pinned on hopes that “the deteriorating macro picture” will convince the Federal Reserve to “cut interest rates sooner rather than later. And cheap money is usually good for stocks.”
Tags: All-time high, Consumer spending, Fed, Investors, Job market, Mass selloff, Optimism, S&P 500, Stocks, Surging, U.S., Weakening, Workers
USA Today (June 22)
“The U.S. attack on Iranian nuclear sites over the weekend could ratchet up the pressure on an American economy that’s turned increasingly fragile as a weekslong global trade war takes a toll.” The new foray “is most likely to impact oil prices, investors said, which could ripple through the economy by causing higher transportation and gas prices, just as overall inflation throughout the economy has seemed to be contained.”
Tags: Attack, Economy, Foray, Fragile, Gas prices, Impact, Inflation, Investors, Iran, Nuclear sites, Oil prices, Ripple, Trade war, Transportation, U.S.
Wall Street Journal (June 20)
Federal Reserve Chair Jerome Powell “offered nothing to hint at a July rate reduction, and investors eyed September as the earliest possible resumption of rate cuts paused earlier this year. With most relevant data still to come, it made little sense for the Fed chair to commit to a specific course of action.” The Fed is waiting to see “the aftereffects” of Trump’s tariffs. “Most economists expect tariffs to lift prices over the coming months, and that is a worry for the Fed because officials still don’t feel as if they completely vanquished inflation after a three-year-long fight.”
Tags: Aftereffects, Data, Economists, Fed, Inflation, Investors, Powell, Prices, Rate cuts, September, Trump’s tariffs, Waiting
Reuters (June 19)
“Central banks are grappling with elevated uncertainty about economic growth and inflation, complicating decision-making, especially for those trying to calibrate policy as they near the end of their rate-cutting cycles.” The rate uncertainty is in turn “making life hard for investors.” For example, “Norway’s central bank on Thursday gave markets a shock by cutting interest rates, and even the U.S. Federal Reserve is warning not to put much weight on its policy projections.”
Tags: Calibrate, Central banks, Decision-making, Economic growth, Fed, Grappling, Inflation, Investors, Norway, Policy projections, Rate-cutting cycles, U.S., Uncertainty, Warning
