US

James Mackintosh

Some interesting charts from Credit Suisse this morning are testing the idea that eurozone unemployment looks particularly awful.

Adjust for the rising number of people participating in the workforce in the eurozone, and the falling number willing to work in the US, and unemployment is just about the same in both. Read more

James Mackintosh

Old stock market wisdom has it that as goes January, so goes the year. As with “sell in May”, “run your winners” and so many others, there is some truth in the saying: in 62 of the last 85 years the US market has moved the same direction in January as in the full year ahead.

On the other hand, the first day of trade is irrelevant, as Howard Silverblatt at S&P Dow Jones Indices points out. Read more

James Mackintosh

As the festive season approaches investors will be preparing for the boring but essential job of selling some of their wonderfully-performing US shares to rebalance their portfolios back into underperforming bonds, protecting some of those gains.

The question investors face is whether such diversification will help protect their portfolios in the future. Read more

James Mackintosh

Money has been piling into European shares as fears of the euro imploding recede, the economy shows signs of life and investors look for the next trade after Japan.

But the “eurozone shares are cheap” theme might have run its course. This chart shows the discount of eurozone forward price-to-earnings compared to the US, as a percentage (using MSCI indices). Read more

James Mackintosh

Investors have used all sorts of valuation models in the past 20 years. Which to use for Twitter, now that it is preparing to float?

Here’s another handy measure: price per worker. Twitter is more than its staff, of course. But it’s a useful sanity check on any valuation. The higher the value, the more investors have to assume there’s something really special about their assets – factories (a carmaker), intellectual property (think cure for cancer), innovative culture (Apple?), near-monopoly position (once Microsoft, now Google). Read more

John Authers

Just what depths of political stupidity are markets discounting? The partial shutdown of the US government passed with little or no impact on the markets that stood to be most affected, even though there was uncertainty about it to the end.

Almost all European stock markets opened higher, despite the news from the US. The dollar index dropped 0.35 per cent in the minutes following the realisation that the shutdown would happen, and then recovered somewhat. The yield on the benchmark 10-year Treasury bond gained 5 basis points to 2.66 per cent – still far below the 3 per cent it briefly touched a few weeks ago. So what has happened so far – the failure to agree on a budget and an initial shutdown of the US government – has evidently been priced in. Read more

James Mackintosh

Here’s the market reaction to the shutdown of (some of) the US government:

  • Benchmark US 10-year Treasury yields rose 0.05 percentage points immediately
  • The dollar index fell 0.4 per cent immediately
  • US equities dropped 0.6 per cent in the build-up yesterday, but the fall was still less than the 0.73 per cent fall in developed world equities.
  • The e-mini S&P 500 futures contract is up 0.4 per cent since the shutdown took effect at midnight in Washington

All of which suggests that investors really aren’t that bothered. Here is conventional wisdom on why: Read more