Blain’s Morning Porridge 16th October, 2024: Boeing, throwing the dice [...]

The markets have been casting a wary eye on rising CRE losses – figuring these may trigger a renewed bout of banking weakness, but the reality is the market has to cope with normalised interest rates and changed demand patterns. Its pain but also opportunity.

The US economy looks strong, robust and resilient. Investors are pouring billions into stock trackers believing it’s all rosy upside ahead. Under the surface there is enormous stress as consumers, corporates, banks and the government struggle with debt and its consequences. If something snaps….

 2024 is not shaping up to be a vintage market year. It will be difficult, uncertain and confusing. There is a speedbump coming!  However, there are plenty of hopeful signals about long term stability, growth and recovery. Just… not yet!

 The Bank of England is worried about Private Credit Markets – good to know they’ve heard of it! Their concerns are valid, but it’s a market very different to banking and doesn’t share the same systemic risk triggers. Its full of opportunity!

Every single business on the planet should be looking at its board composition and corporate governance structure to figure out just how vulnerable they may be. OpenAI’s self-immolation should be a lesson.

Markets feel buoyant and happy, and that makes me nervous. What are we missing? How will spot the inevitable shift in sentiment coming? It’s a traders market. Meanwhile, long-term investors are changing the very structure of the market.

Volatility in Treasury markets is setting off Global alarms. Economic numbers and earnings present a mixed picture of what’s occurring in terms of rates and inflation projections, but the reality is markets are highly vulnerable to rising uncertainty!

The threat list to global markets lengthens, but the Truth will be found in the bond markets. Like inflation and rising rates, the effects of a bond market slide are lagging – It’s going to take other financial assets time to catch up on the bond crash!

Who are we trying to fool? Rising bond yields, higher for longer rates, recession fears, crashing consumption, yet stocks believing earnings could still push them higher? Are we at risk of a realisation moment and a repeat of 1987 or maybe something worse?