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Dry Powder

Fundamentals Financial markets have been extraordinarily challenging lately. Most investors were equally surprised by the market crash as well as the subsequent rebound. Long-term valuations and the business cycle remain a strong headwind for equities. Not even a single stock market correction that accompanied contracting business cycles finished within four weeks during the past 150 years. Moreover, the economic fallout ...
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Free Money

This article discusses evidence for the causes of hyperinflations and defaults. We put the current U.S. debt situation in a historical context and assesses the probability of a significant shock to the financial system. A default or hyperinflation is very unlikely short-term and 10-year Treasury rates probably drift lower during the next months. Subsequently, the next expansionary cycle will start ...
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The Bear Market Just Started

There is something good, bad, and ugly about the most recent rally in the S&P 500. Those who followed us know that we were constructive on equities lately and expected a significant reversal around the 2,350 level in the S&P 500. That proved correct so far. Nonetheless, it is time to get out of the stock market now. At least a ...
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Betting On A WTI Recovery With ETFs Is High Risk

The WTI May 2020 futures contract hit the headlines by trading at minus 40 USD yesterday. Structured investment products were the driving force as financial investors are not interested in holding the physical commodity. They realized too late that nobody else was willing to take delivery as U.S. storage facilities are running at full capacity. The resulting turbulences have real ...
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Fool’s Gold

Gold stood firm during the most recent turbulence across global markets. The precious metal reached a 52-week high, whereas most other assets crashed. Its precious metals siblings silver, platinum, and palladium were no exception. They sold off sharply and in line with risky assets. None of the precious metals siblings recovered their most recent highs back. They rebounded sharply but ...
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This Isn’t The Great Depression

Those who followed us know that we held a strongly bearish view on U.S. equities last year. We published outlooks with titles such as "A Sucker Rally" and "Pennies In Front Of The Bulldozer". Eventually, the bearish outlook conveyed in these articles proved entirely correct. It might have been a surprise for many that we turned optimistic and made a ...
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