Trying to hear what's not being said
November 11, 2024 Leave a comment
Australian real interest rates may soon register the 4th occurrence of a monthly overbought reading from over the past 35 years.
I have expressed this observation by showing the Australian 2 year bond yield minus the Aussie inflation rate.
Client will receive a note very soon about what this is telling me.
November 11, 2024
rob@karriasset.com.au
October 1, 2024 Leave a comment
Broadly, interest rates (2 year government bond yields) are now between 20% and 25% below their peaks and are trading at levels last seen 18-24 months ago.
I think it’s near time for many to re-finance their debt.
From here on in, those companies still carrying much debt, better be seen to pay lower interest expenses over the coming years.
September 19, 2024 Leave a comment
Last week WTI Crude #Oil traded down to $64.04.
I’ve been calling $64 for sometime as its first stop.
While its downtrend needs to be respected for now, it is not yet exhibiting the required strength to send it lower.
No action for now.
Pause and Watching before I call $46.
September 19, 2024
by Rob Zdravevski
rob@karriasset.com.au
September 19, 2024 Leave a comment
#Brazil (and #Chile‘s) central banks see #inflation before the rest of them.
Today, Brazil’s central bank raised interest rates.
They changed direction.
Forget what the U.S. is doing.
It pays to queue off their moves.
The circles in the chart below denotes when Brazil’s central bank
changed interest rates direction compared to where the Brazil’s inflation rate was, at the time.
September 19, 2024
by Rob Zdravevski
rob@karriasset.com.au
August 15, 2024 Leave a comment
Forget the U.S. yield curve, I’m watching the Chilean one.
When the Chilean yield curve inverts, an equities advance is stifled.
It hasn’t yet but it’s making its way there.
In the interim, this move towards zero percent should pause mainly because weekly streaks exhaust themselves.
The yield of the Chilean 2’s have risen for 9 consecutive weeks.
The 10 year yield has fallen for 7 straight weeks.
Inversely, while the streaks take a break, ‘risk’ could rip a little more.
by Rob Zdravevski
August 15, 2024
rob@karriasset.com.au
July 12, 2024 Leave a comment
U.S. inflation has nearly reverted back to its 200 week moving average.
Whether it sees 2% or not, is mute. It has abated and mean reverted.
Such mean reversions are honoured more so after such parabolas.
The bet is now whether interest rates follow……and what that means for various asset classes and business sectors.
The U.S. 2 year government bond yield is the orange line.
July 12, 2024
by Rob Zdravevski
rob@karriasset.com.au
June 10, 2024 Leave a comment
One chapter in the upcoming great bond yield mean reversion……
“Real” interest rates are at same levels seen 20 years ago, as represented by the U.S. 10 year bond minus 10 year inflation break-even rate.
They are also at the same levels seen in 2007 and 2008.
It’s the anti-thesis of the returns available (or money lost) in #bonds during the 2020 and 2021 TINA (“There Is No Alternative”) era for equities.
I’m fancying public bonds, not “private credit”.
June 10, 2024
by Rob Zdravevski
rob@karriasset.com.au
May 20, 2024 Leave a comment
I think U.S. inflation can still decline to the 1.8% mark, somewhere around October 2024……
and all that comes with that for interest rates, commodity prices, growth equities and/or commercial real estate.
May 20, 2024
by Rob Zdravevski
rob@karriasset.com.au
For my past quips, search “inflation” at https://robzdravevski.com/?s=inflation
April 17, 2024 Leave a comment
I am posturing for higher #inflation rates, again.
My expectations (found in my historical posts) for ‘lower’ inflation has occurred and is as good as being completed.
Following up my note dated April 11, 2024, suggesting the irrelevance of the U.K. March inflation report,
While inflation has abated, now it doesn’t matter so much whether this month’s #UnitedKingdom inflation rate of 3.2% is lower than last months (year on year) figure of 3.4%.
Keep in mind, that prices are still rising and I think that is mostly a cause of capacity and supply constraints rather than notable demand.
My thinking is that #UK inflation will move to 5% rather than 2%.
Slowing demand means companies will increases prices for goods and services, in order to maintain their shrinking margins.
April 17, 2024
by Rob Zdravevski
rob@karriasset.com.au
April 11, 2024 Leave a comment
I would like a reduction in interest rate please……
even though the world’s stockmarkets have risen between 25% and 50% over the past 3 years……
Following such wonderful investment returns, why are equity investors are so hinged on whether central banks will lower their interest rate policy or target?
This wish from ‘collective’ equity investors is most perverse.
What is the genesis and motivation behind this story-telling derived by the strategists and pundits from the investment houses?
Something must not be working well enough for ‘them’ when money is priced at 5.25%.
Are companies and individuals still too leveraged?
Perhaps corporate profits are still under pressure even following the rounds of jobs cuts and cost-cutting measures?
Or maybe, banks can’t make enough of a spread between the interest they need to pay on deposits and the amount they can loan out?
I’d argue that a fair cost of money is around 5%-6%.
And rate cuts are often used to flog a dead horse back into life……
Be careful what one wishes for.
April 11, 2024
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