📑 Research Notes for 2021-12-06
This week, we look at the flattening yield curve, the fade in FAANG stocks, less than transitory inflation, and the delisting of Didi Global from U.S. exchanges.
We conduct extensive investment research and share the most interesting content that we come across every week. Here is a curated list of this week’s top observations.
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Treasury Spreads Tank.
(All Star Charts)
Treasury yield spreads are contracting. Inflation has been the talk of the town in recent weeks. But, now that the Federal Reserve has finally joined the chorus, the market seems to be headed in a different direction. At least over the near term. Short rates are holding up just fine, but the longer end of the curve has been under serious pressure.
The FAANG Market Is Fading.
(Morningstar)
Heading into the final weeks of 2021, an important trend has emerged in the stock market: The hyper-concentration of returns that saw a handful of stocks responsible for much of the gains last year has faded.
Inflation: What If It Doesn’t?
(The Economist)
One thing I have to do is to consider what happens if inflation is not transitory. What if energy shortages and supply chain disruptions persist throughout 2022? What if higher energy prices come through in the form of higher real wages and there’s a wage-price spiral like we had in the 1970s? How would that affect my portfolio and how would I change my investments if it were to happen?
Didi’s Delisting Sounds the Death Knell for Chinese IPOs in America.
(The Economist)
Few blockbuster public share sales have been as tortured as Didi Global’s. Within four days of raising $4.4bn in New York in June, the Chinese ride-hailing group was hit with an investigation by the authorities in its home market and its mobile application was dropped from app stores in China, preventing new customers from using it. The firm’s share price remained above its initial public offering (“IPO”) price for just three trading days and has since fallen by more than 40%. Now the company, which was once valued at $70bn and backed by Japanese investment firm SoftBank, says it will delist from American exchanges altogether and relist in Hong Kong.
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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