What we’re reading (10/16)
“Stocks Can Always Get Cheaper” (Wall Street Journal). “My sense is there is more ugly stuff coming. Eighty percent of hedge funds are down and dumping their losers. Short-term interest rates are heading to 5% or higher, which means stocks will trade at a lower price-earnings multiple. Even worse, quarterly earnings misses are starting, and, like cockroaches, you never see only one.”
“A ‘Tectonic Shift’ In Global Wealth That Will Take Years To Recover From” (CNN Business). “ousehold wealth is on track for its first significant reduction since the financial crisis in 2008, according to a new report by financial services company Allianz. Global assets are set to decline by more than 2% in 2022, Allianz reports. That means households, on average, will lose about a tenth of their wealth this year.”
“Retirement Dreams Become Nightmares For Many Older Americans As Inflation Soars” (USA Today). “The news gets worse each month as new inflation data is released. In September, consumer prices increased 8.2% from a year ago. And for people already struggling to pay bills, higher prices for basic necessities cut deeper into already thin budgets. Food prices last month shot up 13% from the previous year and gas prices are up more than 18% from 2021.”
“Liz Truss Versus The Markets” (BBC). “[H]ow can an entity which is impossible to locate, with no central neural function, and with a reputation for being skittish, herd-like, irrational and ethically challenged, force Downing Street to abandon its plans? It has to do with risk and trust. Like an old-fashioned bank manager assessing you for a loan, those who take the individual decisions to buy a UK government bond have to make a judgement on whether the government that issued it is able to pay out interest each year and to repay the face value at the end of its term?”
“We Will See the Return of Capital Investment on a Massive Scale” (The Market NZZ). “According to [investment manager Russell] Napier, financial repression will be the leitmotif for the next 15 to 20 years. But this environment will also bring opportunities for investors. «We will see a boom in capital investment and a reindustrialisation of Western economies,» says Napier. Many people will like it at first, before years of badly misallocated capital will lead to stagflation.”
