Forum Topics Macro Outlook
Mujo
2 months ago

Think everyone has been highlighting that small caps have underperformed - not sure what the catalyst is for them to outperform though. Interesting history to see how they did in the tech boom of the late 90s.

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edgescape
2 months ago

Wondering if the above chart takes into account of small caps becoming a large cap and then moving out of the index

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Chagsy
3 months ago

Australia is top of the table again. If only it were the medals table at the Olympics.

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May not be a huge factor in ASX small cap investing, but all info is good info.

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RogueTrader
3 months ago

As Long As We Beat New Zealand :)

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mikebrisy
3 months ago

@Chagsy curious on Consumer Inflation Expectations the US is listed at 5.3% whereas the 12m number I am reading on TradingEconomics is 3.0%.

That’s a BIG difference.


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Chagsy
3 months ago

Hi @mikebrisy

I have no insight into the data collection variability.

Here is the rest of the article:

In January prices across the rich world rose by 5.7% year on year, down from a peak in late 2022 of 10.7%. This conceals wide variation, however. Some countries have slain the inflation beast. Others are still in the fight of their lives.

To get a view of the various battlefields, we have updated our measure of “inflation entrenchment” for ten rich countries. The measure comprises five indicators: core inflation, unit labour costs, “inflation dispersion”, inflation expectations and Google-search behaviour. We rank each country on each indicator, then combine the rankings in order to form an overall score.

The results are better than in November, when we last conducted the exercise. They also reveal a linguistic divide. Countries in the eu and Asia perform well; in the English-speaking world, inflation is taking longer to fade. Australia tops the ranking. Britain and Canada are not far behind. America is doing better, but even there inflation remains entrenched.

A few factors may explain the differences. One is fiscal stimulus during covid-19, which was 40% larger in the Anglosphere than elsewhere. The boost to demand is still visible in “core” inflation data, which strips out items such as energy, and indicates underlying inflationary pressure. British core inflation is close to 5%.

Our measure of “inflation dispersion” provides similar clues. This measures the share of consumer prices that are rising by more than 2% year on year. Australia tops the rankings here. By contrast, most Japanese prices are rising by less than 2%.

Immigration could also help explain the divide. The rich world has experienced an immigration boom, with a large share of the new arrivals going to English-speaking countries. Last year Australia, Britain and Canada broke net-migration records.

The large rise in population has supported demand. In the past year the cost of renting a flat in the Anglosphere has risen by 8%, compared with 5% elsewhere. The effects on labour markets are less clear. America’s unit labour costs, which measure how much firms pay workers to produce a unit of output, are not rising. But Canada’s are growing strongly.

History may also play a role in explaining the Anglosphere’s entrenched inflation. During the 2010s southern Europe and much of rich Asia saw few price rises. Inflation in the Anglosphere was firmer. Owing to these different experiences, people’s current beliefs about future inflation may also differ.

Data coming out of America are worrying. The public believes prices will rise by 5.3% over the next 12 months, more than in any other country in our ranking. Americans also often search on Google for inflation-related topics, suggesting that the cost of living is still on their minds. Across the Anglosphere the threat of continued high inflation—or even a second wave of price rises—has not gone away.

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Chagsy
3 months ago

Its impossible to beat them in the style stakes.

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Chagsy
4 months ago

There is certainly a lot of commentary about the US market being frothy, or indeed in a bubble.

The CAPE Schiller is back up to the third highest of all time and there have been some clever analysts looking at the probability that the US market over the next 10 years will produce the same return as the last 10 years (essentially nil).

I recently discovered the following:

https://destiny.xyz/tech100

It is now possible for retail investors to buy into the unlisted VC space to access the likes of Open AI, SpaceX, Stripe etc.

My initial reaction is that this is another indication that we are in bubble territory. But the bubble may inflate significantly further and VC will only try to exit at the top. And a few of those companies are likely to become world beating (possibly otherworld visiting) giants of the future.

So, this is probably a live working example of @Solvetheriddle 's "what kind of investor are you?"



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Mujo
4 months ago

MQG Developed FOMO Meter - looks like a take on the CNN one.

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What is the FOMO Meter?

The FOMO Meter analyses equity sentiment to identify periods of excessive optimism (FOMO) or pessimism (fear of losing). The FOMO Meter has 7 components described later in the report. The latest data for each is:

1. Asset managers are 38.7% net long S&P 500 futures (+15ppt YoY);

2. Active managers have 104.8% equity exposure, nearly double a year ago;

3. Net 46.4% of newsletter advisors are bullish (+32ppt YoY);

4. Net 24% of individual investors are bullish (+51ppt YoY);

5. Individual investors' equity allocation is 67.8% (+3.1ppt YoY);

6. Net 50.2% of S&P 500 stocks are above the 200-day average; and

7. The VIX is below average at 14.3, down from 21.7 a year ago.

Unlike some other sentiment indices that are available, we focus on equity sentiment only, not sentiment in other markets (e.g. gold prices or credit spreads). We also exclude economic indicators, as we prefer to use the OECD leading indicator to track the economic cycle. Lastly, we excluded some well-known indicators (e.g. put/call ratio), as they did not seem to add value in predicting future equity returns


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