Market Thinking

making sense of the narrative


Month: June 2020

And for your next trick?

Fund Managers are sometimes referred to in the terminology of the philosopher Isaiah Berlin as being either foxes – who know many things – or hedgehogs – who know one big thing. Investors should perhaps be particularly careful when a Read more…

Narrative flipping from fear to greed

The idea that the equity market strength last week was somehow down to the ‘better than expected US employment numbers’ confirms our view that this is a noise trader bubble building in equities. Like the PMI data, the non farm Read more…

Market Thinking June

Markets factored in much of the cyclical aspects of Covid into earnings during January and February. The crash in March was down to market mechanics such as positioning and distressed selling, margin calls and illiquidity. April and May have recovered that March sell-off so remain fairly, if not cheaply priced. Medium term risk in illiquid alternatives and corporate credit has been largely removed by the Fed, with GeoPolitics replacing it as the main concern, especially the New Cold War between the US and China. Investors should be considering those risks , together with the opportunities presented by the broad restructurings that the post Covid world will bring, focusing on ultra cheap capital for some and the importance of cash flow for all.