As Bad as it Gets…
Let’s get straight into this one. Here’s the reality: shit is rapidly falling apart, as expected…?
If you recall, last month I laid out how quickly forward-looking indicators
And, while we’ve just now entered a ‘technical recession
Let’s have a look at some charts to see just how bad things really are.?
This is the worst H1 for US Bonds since 1788!?
… and the worst start to equities in real terms since 1872…?
If that were not bad enough, when you combine the losses in equities and bonds in the US, it is the worst drawdown as a percentage of GDP in all history… 60% of US GDP!!! Yes, you read that right...
Looking at just the last few weeks, we’ve experienced one of the most volatile five-week periods since 1929…?
Let me put this into context before we look at more charts. In global terms, I estimate that the war on inflation has cost:?
That is a mind-boggling 36% of global GDP and is likely to get worse…?
By the time the dust has settled, we will have destroyed some 40% to 50% of GDP in asset valuations.?
All of this, just to fight 9% inflation that, as I’ve explained before, was driven by supply issues not demand issues. Wow.?
This had led to the worst sentiment I have EVER seen in financial markets.
Positioning in Equity Futures is the lowest in history…?
AAII Sentiment of Bears just hit its highest level ever…?
Bullish Sentiment touched its lowest level ever…?
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Sentiment towards stocks and bonds combined are at the lowest level ever…?
Pessimism is near all-time highs…?
… and Emerging Market Bond Sentiment is as bad as it gets…?
Dollar Liquidity is at its lowest level ever…?
While bond market liquidity is the second lowest level ever…?
Everything has been taken out and shot. These are the lowest returns ever…?
Global Consumer Confidence
… and this is showing up in a buyers strike from consumers… the worst conditions ever…?
... and Small Cap Valuations
You get the idea… we have never seen anything quite like this.
As ever, be careful out there!
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2 年Raoul, thanks for sharing!
Principal @ Lombardo Asset Management | CFA Charterholder, FRM
2 年Jack Rosa
Ideal Stage Innovator
2 年Thanks for Invite
English Teacher (ESL/EFL) / Lecturer / Educator / Proofreader / Editor
2 年Thanks, Raoul - As Frank said, that was sobering. I think in a good way, like shaking me as I'm already a bit dazed. Hopefully the shake gives me a better investment thesis. Just wish I had cash to buy things with now and into the coming months!