2023-05-26 Markets
These days one cannot escape an enhanced feeling of cluelessness, similar to the one exhibited by the poor animal in the cover picture. Markets swooned during the week, apparently perturbed by the evolution of the debt-ceiling story in Washington and the revision of monetary policy expectations (why bother?). Despite it all real assets, including inflation linkers, ended up having a positive week.
Something important maybe happening in Japan. The country, plagued by deflation for decades, is finally showing hopes of moving out of that state. This is posing a problem for the Bank of Japan, which in addition to keeping official rates below zero is also maintaining 10-year government yields at unreasonable levels (costing a ton of money, see first picture below). The implication is that the central bank may have to give up this yield-containment policy, something that will likely unsettle the Yen (pushing it higher) and other fixed income markets around the world (pushing them towards higher yields).
We have a new trillion-dollar company. One that sells at 218 times earnings and over 36 times sales (those are nor typos). Can you guess what is the name, without looking at the second picture below?
[Cover: Lombard Odier, advertisement]
Something important maybe happening in Japan. The country, plagued by deflation for decades, is finally showing hopes of moving out of that state. This is posing a problem for the Bank of Japan, which in addition to keeping official rates below zero is also maintaining 10-year government yields at unreasonable levels (costing a ton of money, see first picture below). The implication is that the central bank may have to give up this yield-containment policy, something that will likely unsettle the Yen (pushing it higher) and other fixed income markets around the world (pushing them towards higher yields).
We have a new trillion-dollar company. One that sells at 218 times earnings and over 36 times sales (those are nor typos). Can you guess what is the name, without looking at the second picture below?
[Cover: Lombard Odier, advertisement]
