Argonautica

Professional investors can review published thought leadership and market updates from the Argonaut Investment Team.

84 posts found by Barry Norris

‘From the Roaring 20’s to 70’s Stagflation Redux’

So much for the “Roaring ‘20’s”. We now have a “stagflation” situation, whereby “inflation” and “stagnation” previously thought to be mutually exclusive are now concurrently prevalent. The global economy faces a series of worsening supply shocks – still widely underestimated and predicted to be “transitory” - for which financial markets are ill prepared and central banks impotent to resolve. Are the 40-year rates and 13-year growth-stock bull markets now over, usurped by a 1970s redux?

‘Winter is Coming: it now makes sense to hedge’

Financial markets have staged a spectacular recovery from their March 2020 crash based on unprecedented but temporary monetary and fiscal stimulus but also trust that vaccines would eventually eradicate COVID. The forthcoming northern hemisphere winter coronavirus season risks a reset of high vaccine expectations at a time when central banks and governments have already shot their bolt. This time we could have an economic freeze from which markets may not so quickly rebound.

‘What did “90% efficacy” really mean?’

Since the November 2020 headlines of “90%” vaccine efficacy, financial markets have generally believed that vaccines would eradicate COVID and therefore end the need for lockdowns, allowing normality to resume. It is probable that vaccine efficacy was never “90%” against transmission and that the efficacy against symptomatic infection wears off, hence the need for regular or annual “boosters”. It is almost certainly not correct to say that the vaccines provide “90% efficacy” for life against either infection or disease progression which is how the original headlines were interpreted and how the general population views the “vaccine solution”.

‘Has the Fed just killed the cycle?’

Despite currently very high headline rates of inflation -  CPI of 5.0 % and PPI of 6.6% - the US Treasury yield curve has been flattening since March 31st when the 10-year peaked at 1.74%, the bond market already endorsing Fed Chairman Powell’s view of inflationary pressures as largely “transitory”. Strange then, that in an apparent change of message the recent FOMC decided that inflationary pressures might not necessarily be transitory after all and was already discussing tapering asset purchases,…

View more