ISMD News and Press, Inspire Small/Mid Cap Impact From 10/03/22

Summary The new regime poses an unavoidable trade-off for central banks: tame inflation by hiking or preserve growth. We see them overtightening rates, so keep risk low. UK gilt yields reached 14-year highs before the Bank of England intervened to halt the selloff. Yields on 10-ye...

Summary YTD, the S&P 500 is now down 24% while bonds have their own double-digit losses. Like stock valuations, currency valuations aren’t great timing tools but over a 3-year period after becoming undervalued, the outperformance is strong. Consumer defensive stocks...

Summary The Great Financial Crisis taught us about the extraordinary capacity of central bank balance sheets and fiscal authorities to absorb financial shocks and mitigate the effect of massive deleveraging. The politicians and monetary policymakers have become too used to their s...

Summary We are now approaching the market region which can support a major rally. The nature of the next rally will tell me if we are still on track for higher market highs or not. One way or another, I am expecting a major bear market to begin and last at least 7-8 years, and...

Summary The average of S&P 500 for September 2022 was 3,853 (18% down from December 2021 average of 4,675) and is still 1,243 points higher than the corresponding long-term trend value of 2,610. For the S&P 500 to reach the long-trend would entail a 32% decline from the Se...

Summary All the inflation news coming out this past week was not good. The fight against inflation is really just beginning. U.S. interest rates are rising and the Treasury yield curve has turned negative, forecasting a recession, if it is not already here. All signals fro...

Summary The Bank of England's new purchases of Gilts coincided with a reassessment of the trajectory of Fed policy. The rapid referendums in eastern Ukraine and Russia's annexation of the territories, after taking Crimea in 2014, point to a new phase in the conflict. Sterling'...

Summary As the BOE began to raise rates and market yields surged higher, trouble quickly materialized. The size of the LDI (liability-driven investing) market has exploded over the past decade. The Bank of England stopped the selloff exacerbated by heavy selling from U.K. pens...

Summary Economic data has been "recession-like", but the FED has no option but to raise rates in that backdrop to kill inflation that remains resilient. US economic growth is anemic today. Using the word "mild" to describe any recession scenario now is a mistake. TINA is dead....

Summary Volatility and uncertainty seem to be re-emerging back into the markets. The bigger issue for the U.S. is “the consequences of rapidly rising interest rates.”. Money market funds have realized two straight weeks of inflows. Volatility and uncert...