FNArena’s Weekly Insights – July 17 2023
In this week’s Weekly Insights:
-Master & Servants; Bonds vs Equities
-Earnings Forecasts: Low Expectations Not Low Enough?
-Conviction Calls & Best Ideas
By Rudi Filapek-Vandyck, Editor
Master & Servants; Bonds vs Equities
“I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
If your experience is similar to mine, you have been closely watching global stock markets for many years, decades!, but only recently have you started to genuinely appreciate the true meaning of that statement made in the late 1990s by former president Clinton advisor James Carville.
Equities, precious metals and commodities, and bonds usually operate in worlds apart from each other, with the occasional, temporary, exception. The stock market is all about corporate profits, so we have been told, and thus bonds are left to those who cannot stomach the risks and volatility of equities, FX and commodities.
Stocks and bonds; it’s often seen as an uneasy, even an unnecessary combination. On multiple occasions I have seen faces of equity managers turn gray when asked about what bonds might do in the future. It’s simply not in their DNA.
Some six years ago I attended an anniversary event of the 1987 global share markets crash, watching several gray-haired survivors walking off stage after conceding “we still don’t know what caused it”.
Fingers are usually pointed at programmatic trading programs, but the initial trigger most likely came from German and US bond markets.
