📑 Research Notes for 2022-09-05
This week, we look at a rare bear market in global bonds, the necessity of fiscal-monetary policy balance, comparisons to the 1970's, the shutdown of Nord Stream 1, and China's currency troubles.
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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Global Bonds in First Bear Market in a Generation.
Bonds have slumped into their first bear market in a generation. The Bloomberg Global Aggregate Index has fallen more than 20% below its 2021 peak. That’s the biggest tumble since its 1990 inception.
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Rate Hikes Won’t Bring Down Inflation If Government Spending Stays High.
A paper released at the same Jackson Hole summit where Fed Chair Jerome Powell spoke suggests the central bank can’t do the job itself and could make matters worse with rate hikes. The paper argues that without constraints in fiscal spending, rate hikes will make the cost of debt more expensive and drive inflation expectations higher.
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Niall Ferguson: “Much worse than the 1970’s.”
Top historian Niall Ferguson warned Friday that the world is sleepwalking into an era of political and economic upheaval akin to the 1970s — only worse.
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Gazprom Announces Indefinite Shutdown of Nord Stream 1.
Gazprom halted gas flows through the Nord Stream 1 pipeline to Germany Friday, citing a gas leak and providing no time frame for when supplies could be restarted.
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China’s Currency Struggles Spell Trouble Across Emerging Markets.
As growth sputters in the world’s second-biggest economy, its currency has tumbled to a two-year low and looks set for further losses. That’s pushing Goldman Sachs Group Inc. to SEB AB to predict shock waves not just in China’s neighborhood but as far away as Africa and Latin America -- with a cheaper yuan hitting other nations’ export appeal and sparking competitive devaluations.
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Last Week’s Market Performance Heatmap
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Curated by Joseph Lu, CFA®
Joseph is the founder and a managing director of Conscious Capital Advisors, as well as a CFA® Charterholder.
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