Morning Macro 18th December
While equities weaken (S&P500 -1.2%, Nasdaq -1.9%), precious metals continue their surge, platinum up another 3.5% today (+17.1% in 6 days), silver +4% yesterday, and a friendly reminder, gold is a mere 2.8% of investors AUM. Smart money continues to rotate out of crowded AI trades: Oracle -5.4% as Blue Owl Capital decides to walk away from a $10 bn data centre deal with them. Oracle is now down 48% from its peak, CoreWeave -65%, OKLO -61%, IONQ -46%, Applied Digital -45%…..
As legendary investor Howard Marks puts it bluntly: “When you buy the S&P 500 at a 23x P/E, your 10-yr annualized return has always fallen between +2% and –2%, IN EVERY CASE, EVERY CASE.” Today the market sits at a 25x P/E. Add inflation… and your “returns” are negative.
Michael Burry was out overnight highlighting that household stock wealth being higher than real estate wealth has only happened in the late 60s and late 90s, the last two times the ensuing bear market lasted years. To add to concerns margin debt increased +42% in the past 7 months as investors go ‘all-in’. This only happened 5 times before, and the S&P 500 was lower 1 year later every time.
U.S. large bankruptcies have hit 717 year-to-date, the highest level in 15 years.
UK inflation falls from 3.6% to 3.2% YoY (est 3.5%), while PPI rose to +1.1% (from +0.8% prior).
House price in Kensington fell 16.5% YoY in the run up to Rachel Reeves budget. Westminster -16.1%, Tower Hamlets 11.3%, Hammersmith & Fulham -7.5%. (ONS)
German IFO business climate falls from 88.0 to 87.6. Expectations also falls from 90.5 to 89.7.
New-home prices in China fell -2.4% YoY in November, marking a severe acceleration in declines. Secondary home prices plunged across all city tiers, with first-tier cities recording a -5.8% YoY drop, while second tier and third-tier cities fell -5.6% and -5.8%, respectively. China’s real estate market has been in a downturn since mid-2021. (Chart 2, LSEG DataStream, Sumanta Sen, Kobeissi Letter)
President Trump announces a “warrior dividend” which is a $1,776 stimulus check sent to 1,450,000 US soldiers….. He also said the new Fed chair will believe in lower interest rates by a lot. And………. Venezuela must return oil, land, other stolen assets
In 90 mins Bitcoin trades from 87.3k to 90.3k back to 86.3k. And if you believe no one is deliberately trying to trigger your stops in an unregulated market, Santa will be here in less than a week.
Key data today – US CPI (first reading in weeks as October report was cancelled). ECB meeting (expected unchanged), BOE MPC 25bp cut expected.
