The content of this issue is excerpted from [Xiaopeng's Financial Charts] Knowledge Planet, which is a column that tells the financial world in the form of charts. Here, we read 10,000 pieces of information every day, make 100 notes, and select 20 valuable financial pictures. A good picture is worth a thousand words, it can help you understand the global situation more clearly and intuitively, and make better decisions. For more high-quality selected charts, please scan the QR code below to join our paid channel:
The best hedging trade for geopolitical conflicts: crude oil, gold or Japanese yen?Citi: If the conflict unexpectedly escalates and investors' risk aversion rises rapidly, gold and the Japanese yen may be better hedging options: 1) The most effective hedging tool is the market positioning bias towards the "wrong" variety, and the Japanese yen may be a better choice than the Swiss franc. 2) Gold is often seen as a safe-haven asset and has performed well during periods of rising geopolitical uncertainty. 3) The current oil market has already priced in some of the risk premium, and it is not a basic assumption that oil prices could rise to $100 only if the situation escalates significantly.
Bitcoin: The trend of the proper risk asset Bitcoin and the Nasdaq-100 3x leveraged ETF is surprisingly consistent.
The higher the debt ratio, the lower the interest rate? This is an interesting chart that shows the debt ratio (the balance of non-financial sector debt as a percentage of GDP) and the yield on 10-year Treasury bonds in different countries around the world.
Currency Wars: The US dollar is one of the best-performing currencies so far in 2024. Some emerging market currencies have lost as much as 10% of their value compared to the U.S. dollar. The Chilean peso, the Turkish lira and the Brazilian real depreciated by 10.5%, 9.2% and 8.1%, respectively.
BofA Fund Manager Survey1) Fund Manager Bullish Sentiment is the highest since January 2022.
2) More than half of fund managers expect a "soft landing" in the next 12 months, a figure down 15% from January, when 71% of fund managers expected a soft landing. Now, more than a third expect "no landing."
3) 26% of investors believe gold is overvalued, the highest level since August 2020.
Is the depreciation of the yen a good thing for Japanese stocks? Da Mo: 152 is a watershed momentMorgan Stanley pointed out that the depreciation of the yen is a positive factor for corporate earnings. However, when the yen exchange rate falls below 152, the Japanese stock market begins to underperform the US stock market, which may have a negative impact on the Japanese stock market. Excessive yen weakness has three negative effects on the stock market: first, the impact on the real economy (i.e., consumer spending), second, the widening of the gap between firms and households, exporters and domestic enterprises, especially for small and medium-sized enterprises, and third, the decline in returns for overseas investors.
U.S. stock valuations vs. earnings charts U.S. corporate earnings have recovered somewhat, and the stock market rally is stronger than last year. The valuation depends on the present value of future cash flows, with the numerator being the earnings and the denominator being the cost of capital. When earnings are weak, a change in the denominator has a greater impact and vice versa. The futures market has already cut rates less than three times this year, but still expects six cuts over the next two years. Barring a recession, this rate cut seems too many if inflation remains in the 3-4% range.
"Pretty" U.S. vs. "Other" advanced economies: Only the U.S. is consuming?
Goldman Sachs raises US Q1 GDP forecast to +3.1%
Goldman Sachs: Copper prices will hit a record high in 2025, surpassing the 1971 record.
Copper has hitched a ride on the "transformation of the old and new energy systems", but iron ore is still mired in the "real estate downturn".
High interest rates hurt smaller companies even more, and high interest rates hit smaller companies much harder than large ones. This may be part of the reason for its severely underperformed performance over the past two years. Smaller companies typically spend a higher percentage of their revenue on debt servicing, making them more sensitive to rising interest rates. The interest coverage ratio (operating income/interest expense) for the small-cap S&P 600 is 2.3x, compared to 7.6x for the large-cap S&P 500.
This article does not constitute personal investment advice, does not represent the views of the platform, the market is risky, investment needs to be cautious, please make independent judgment and decision-making.