The Delta coronavirus variant will hit the reflation trade in the casino-like stock market, says top analyst David Rosenberg

Trader on the floor of the New York Stock Exchange
US stocks are near record highs despite rising COVID-19 cases.

  • Top analyst David Rosenberg recommended investors stay away from “reflation” stocks as Delta COVID-19 cases climb.
  • He told CNBC that rising cases and a reduction in fiscal stimulus will create headwinds for the US economy.
  • Rosenberg said the stock market has become like a casino, but the bond market tells the truth about the economy.
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The rise in Delta-variant coronavirus cases and a reduction in fiscal stimulus will weigh on the US economy over the next several months, leading market analyst David Rosenberg has said.

Rosenberg said on CNBC that investors should therefore stay away from the “reflation” stocks that tend to do better when the economy is stronger. Such reflation stocks have typically included banks and energy companies.

He also warned the equity market has become like a casino that is detached from economic reality.

“The on-again, off-again massive fiscal stimulus is in the rear-view mirror, and so we have that, and we have the question marks in front of the Delta variant,” he told CNBC’s “Trading Nation” on Friday. “It’s going to be a very challenging outlook for the economy in the next several months.”

Read more: Goldman Sachs says these 31 downtrodden, virus-exposed stocks are poised for a resurgence as they offer robust double-digit sales growth through year-end

“You don’t have to basically abandon the stock market, but I definitely would not be in the value reflation cyclical trade,” said the analyst, who was Merrill Lynch’s most senior economist from 2002 to 2009 and is now the president of Rosenberg Research.

“I would be in the areas that are more, call it, defensive growth. That could be healthcare, consumer staples, could be utilities.”

The US registered a seven-day average of 79,763 new reported coronavirus cases on August 1, up from 32,068 two weeks earlier, according to New York Times data.

Rosenberg said that the stock-market has “frankly become a bit of a casino”, as the S&P 500 stands at around all-time highs despite a cloudy US economic outlook.

He highlighted the US’s second-quarter reading of gross domestic product, which missed expectations in late July. GDP rose at an annualized rate of 6.5%, compared with expectations of an 8.5% increase.

Rosenberg said the bond market is telling the truth about the economy, with yields down sharply from March highs as investors have priced in slower economic growth and inflation.

The yield on the key 10-year US Treasury note, which moves inversely to the price, has fallen to 1.234% from above 1.7% at the end of March. Investors tend to buy bonds and accept lower yields when they expect growth and inflation to be low.

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40% of retail investors think stocks are in a bubble but amateurs keep buying anyway, survey shows

A person using a mobile phone app to invest in stocks.
Retail trading boomed in 2020 during the coronavirus pandemic.

  • 40% of retail investors think stocks are in a bubble after a breakneck rally, according to a new survey.
  • But trading app eToro found that amateur investors remain keen on stocks and think a crash is unlikely.
  • eToro’s survey of 6,000 investors found that their biggest worry is inflation, which has soared in the US.
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Two in five retail investors think global stock markets are in bubble territory, but think a crash is unlikely and appear to be happy to keep buying equities, according to a new survey.

Retail investors believe inflation is the biggest threat to their portfolios, a survey published by trading app eToro found this week.

Polling firm Opinium carried out the survey for eToro and spoke to 6,000 retail investors across 12 countries, including the UK and US, who did not have to be eToro users. It gives a sense of how amateur investors view markets as economies recover from the pandemic.

Although 40% of retail investors said equity markets are in a bubble, 15% said they are fairly valued or undervalued. Another 45% said they neither agreed nor disagreed that they were overvalued, suggesting some uncertainty about the future path of securities. A bubble is typically seen as a moment when stock prices rise rapidly and are higher than justified by fundamental factors such as the health of the economy.

A considerably lower proportion of retail investors think stocks are about to crash than think they are in a bubble, however, with 27% predicting a sharp drop before the end of the year.

Read more: The CEO of the investment-research firm Fintel shares 3 market sectors where insiders are buying and details how his tool can help retail investors identify opportunities

Stocks have soared since the pandemic-induced crash of March 2020, especially in the US. The benchmark S&P 500 has risen more than 90% since its March 2020 low, and US equities are regularly hitting record highs, even as the global pandemic continues.

“It’s worth remembering that while valuations are high, equities are currently cheap compared to bonds,” said Ben Laidler, global markets strategist at eToro.

“The fact that just one in four investors believe that another correction is due before the end of the year suggests that many of them are willing to carry on paying current valuations – for now, at least.”

Just shy of 40% of retail investors believe rising inflation is the biggest threat to their portfolio, eToro’s survey found. But that number rises to 51% in the US, where year-on-year inflation jumped to a 13-year high in June.

eToro found that traditional inflation hedges such as real estate were popular portfolio picks, while a large number of investors were keen on gold.

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The S&P 500 is on track for the best quarterly earnings growth since 2009 as companies smash expectations

Wall Street New York Stock Exchange
Company earnings have consistently beaten Wall Street estimates in the second quarter.

S&P 500 companies are on track for the best earnings growth since 2009, with companies smashing estimates as the US economy bounces back to life from COVID-19 lockdowns.

The strong quarter is helping support stocks despite high equity prices, rising inflation, and the threat of the delta coronavirus variant.

Earnings for S&P 500 companies are expected to grow 78.1% year-on-year in the second quarter, according to figures from financial data company Refinitiv, released Friday. That would be the best quarterly performance since the final three months of 2009, during the initial rebound from the financial crisis.

Around a quarter of the 500 companies that make up the benchmark US stock index have reported. Those in the industrial, consumer discretionary, and financial sectors are set to do the best as they profit from the reopening of the economy and favorable comparisons to last year’s weak second-quarter earnings.

So far, 88% of S&P 500 companies have beaten earnings per share estimates for the second quarter, according to data provider FactSet.

The strong results put the S&P 500 on track to be the best quarter for beats since FactSet started tracking the data in 2008. The current record was registered in the first quarter of 2021, when 86% of companies beat estimates.

Read more: GOLDMAN SACHS: 33 stocks to buy right now for strong returns of at least 15% and minimal risk as the economic reopening helps equities grind higher into year-end

And companies are raising their expectations for earnings and sales as the economic rebound continues. For example, Coca-Cola stock jumped on Wednesday when it increased its revenue and earnings outlook, citing the strong economy.

Investors have not reacted strongly to the second-quarter earnings, given that the S&P 500 has already soared more than 90% since its pandemic-induced crash in March 2020.

But the strong earnings are helping the benchmark US stock index hover at record highs.

JPMorgan analysts, led by Dubravko Lakos-Bujas, on Tuesday upgraded their year-end target for the S&P 500 from 4,400 to 4,600, which would be roughly a 5% increase from Friday’s level.

The index “should be supported by strong earnings growth and capital return until 2023,” Lakos-Bujas and colleagues said in a note.

Importantly for investors, profit margins are strong despite rising inflation and some reports of higher costs. John Butters, senior earnings analyst at FactSet, said net profit margin for the S&P 500 for the second quarter is expected to be 12.4%.

“If 12.4% is the actual net profit margin for the quarter, it will mark the second-highest net profit margin for the index since FactSet began tracking this metric in 2008, trailing only last quarter’s net profit margin of 12.8%,” he said.

Yet, there are risks ahead, not least the fact that the coronavirus pandemic is far from over. Delta variant cases have soared in Britain, and survey data suggests the numbers are slowing the country’s economic recovery.

Cases are now on the rise again in the US, contributing in part to a sharp sell-off on Monday, which saw the S&P 500 drop 1.6% and the Dow Jones fall 2.1%.

However, many investors are hoping high vaccination rates can keep advanced economies ticking over. Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note: “We see reasons to look beyond the delta variant headlines and stay risk-on, with a tilt toward reflation and reopening beneficiaries.”

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JPMorgan beats estimates again in the 2nd quarter amid record quarter for investment banking

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JPMorgan CEO Jamie Dimon.

  • JPMorgan beat estimates once again in the second quarter, with earnings per share of $3.78.
  • The bank’s investment banking arm posted record numbers, and the firm also received a $2.3 billion boost by reclaiming money that had been set aside to cover bad loans.
  • JPMorgan boss Jamie Dimon said customers and clients were faring well as the economy reopened.
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JPMorgan again beat expectations with its second-quarter earnings, as the banking giant benefited from record investment-banking fees and the release of cash set aside to cover loan losses.

The lender’s revenue came in at $31.4 billion, it earnings showed on Tuesday. That was above the $29.9 billion analysts had been expecting but down from $33.8 billion in the same quarter a year earlier.

Net income stood at $11.9 billion in the second quarter, boosted by the release of $3 billion that had been put aside to cover bad loans, which added $2.3 billion to the bottom line after charge-offs. Net income was up 155% from $4.7 billion a year earlier.

Earnings per share came in at $3.78, above expectations of $3.21 and up 174% from the same quarter in 2020.

Here are the key numbers:

  • Earnings per share: $3.78 vs. $3.21 expected.
  • Revenue: $31.4 billion vs. $29.9 billion expected.

“JPMorgan Chase delivered solid performance across our businesses,” said Chairman and CEO Jamie Dimon.

“This quarter we once again benefited from a significant reserve release as the environment continues to improve… Consumer and wholesale balance sheets remain exceptionally strong.”

Read more: UBS names 6 bank stocks to buy as successful stress tests open the door to buybacks and dividends – and highlights 2 laggards to avoid

The Wall Street lender, the biggest in the US by assets, is seen as a bellwether company whose earnings give a sense of the health of the economy. Its results on Tuesday showed how banks are benefitting from rapid economic growth which has made much of the money they set aside in 2020 to cover bad coronavirus loans redundant.

JPMorgan’s earnings also showed that its investment banking arm fared well in the second quarter despite quieter markets. Investment banking fees rose 25% year on year to a record high of $3.6 billion, largely driven by the boom in mergers and acquisitions.

The bank’s stock was down 0.63% in pre-market trading after the earnings were released, at $157.00. It has risen more than 20% in 2021 as so-called cyclical stocks have benefited from a lifting of coronavirus restrictions and strong economic outlook.

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The S&P 500 will tumble as much as 10% in the summer as growth peaks, Deutsche Bank predicts

new york stock exchange
The S&P 500 is due a correction, Deutsche Bank said.

  • The S&P 500 will fall between 6% and 10% in the summer before rebounding, Deutsche Bank predicted.
  • The bank’s analysts said rising inflation may unsettle investors, while earnings growth would cool.
  • Investors have become more cautious about US stocks, with many strategists looking towards Europe.
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The S&P 500 is likely to drop as much as 10% in the summer as economic growth peaks and investors lose their nerve, Deutsche Bank has said.

The benchmark US stock index has risen more than 15% so far this year. That has taken it to 4,344, already putting it above Wall Street analysts’ average year-end target of 4,276, as compiled by CNBC.

Deutsche Bank strategists on Tuesday said investors had gotten ahead of themselves and that they expected the index to fall between 6% and 10% in the summer.

The strategists, led Marion Laboure, said one concern is economic growth is likely peaking after the rapid rebound from the COVID-19 pandemic.

Read more: A weaker economy and stronger dollar threaten to sink the S&P 500 by 11% and send bitcoin tumbling to $12,000, Stifel strategists warn. Here are the 9 industries they recommend hiding in for the rest of 2021.

Laboure and the team said analysts are unlikely to keep upgrading companies’ earnings forecasts, which has been boosting stocks. And they said inflation remains a risk which could unsettle investors, after prices growth hit a 13-year high in the US in May.

However, the Deutsche strategists said the 6% to 10% drop should be a healthy correction for US stocks. “We then see equities rallying back as our baseline remains for strong growth but only a gradual and modest rise in inflation,” they wrote in Deutsche Bank’s quarterly “House View” report.

Investors have become more cautious on US stocks as of late, after a rapid rally in the first few months of the year. Many strategists are looking towards Europe as a place to find more affordable stocks that can benefit from a rebound in the global economy that will help sectors such as financials.

JPMorgan Asset Management said in its mid-year outlook that it expects stocks to rise in the second half of the year, but said investors should expect a bumpier ride as inflation worries “contribute to the jitters.”

Analysts at Barclays said in a recent note: “We believe that concerns over peaking global growth, inflation risk, and a hawkish [Federal Reserve] derailing the market are overstated.

But they said they were only “grudgingly” positive about stocks, given equity prices have already risen sharply in 2021.

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The rotation into value stocks will get a new lease of life as the US economy booms, JPMorgan strategist says

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The US economy is booming as Americans spend built-up savings.

  • The rotation into value stocks should pick up pace again as the US economy roars, a JPMorgan strategist said.
  • Hugh Gimber said Americans with built-up savings should benefit banks and consumer-focused companies.
  • The so-called reflation trade has paused in recent days after the Fed appeared to shift its stance.
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The rotation into so-called value stocks in the US has further to run as rapid economic growth pushes up bond yields, a JPMorgan strategist has said, despite signs that the trade has cooled in recent days.

Hugh Gimber, JPMorgan Asset Management’s global market strategist, told Insider that companies in the financial and consumer-focused sectors stand to gain, thanks to Americans unleashing pent-up savings and wages rising as the economy bounces back.

“I do expect US value to outperform US growth,” Gimber said. “It’s about the laggards from last year having more scope to catch up to the rest of the pack because of the environment that we’re in.”

The first half of 2021 in financial markets has been marked by a “reflation trade“. It has seen investors pivot away from the fast-growing tech stocks that did so well in 2020, toward sectors such as energy and financials that are likely to perform better as growth and inflation pick up.

However, recent signs that the US Federal Reserve may be more concerned about inflation than previously thought have knocked the trade’s popularity. The tech-heavy Nasdaq index is up more than 5% over the last month, while the more industry-heavy Dow Jones is down around 1%.

Yet Gimber said he expects strong growth and higher inflation to push up bond yields in the second half of the year.

“You have consumers with pent-up demand, cash in their pockets, that can now get out and spend, driving a very strong outturn for growth.”

Higher market interest rates would likely make the earnings of so-called growth companies – whose full potential is often far in the future – look less attractive to investors.

The JPMorgan Asset Management strategist said rising wages would boost Americans’ spending power, benefitting companies in consumer-discretionary sectors such as luxury goods, vacations, and cars.

He said: “A healthy consumer tends to be helpful for financials, coupled with the latest news on buyback prospects for the financials and the rising yield environment, all of which bodes well for that sector.”

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S&P 500 and Nasdaq futures hover near record highs after Joe Biden strikes $1 trillion infrastructure deal, while oil prices rise

Joe Biden Rob Portman infrastructure deal
President Joe Biden (right) reached a deal with Republicans on infrastructure.

S&P 500 futures hovered near a record high on Friday after President Joe Biden struck a deal with Republicans on a $1 trillion infrastructure deal, which includes $579 billion of new spending.

Futures for the benchmark S&P 500 were up 0.05%, while Nasdaq 100 futures rose 0.04%, after both indices hit a record high on Thursday. Dow Jones futures rose 0.26%, with industrial firms more likely to benefit from infrastructure spending.

In Asia overnight, China’s CSI 300 jumped 1.63% while Japan’s Nikkei 225 climbed 0.66%. In Europe, the Stoxx 600 index slipped 0.09% in early trading.

President Biden’s deal would see over $1 trillion spent on upgrading the US’s infrastructure over the next eight years. Roads, bridges and rail networks would be particular priorities.

Biden pushed Congress to pass the bill on Thursday, saying: “We have to move and we have to move fast.”

Oil prices extended their rally on Friday, heading for a fifth weekly consecutive gain, with Brent crude up 0.36% to $75.82 a barrel and WTI crude up 0.27% to $73.50.

Richard Hunter, head of markets at Interactive Investor, said: “News of the infrastructure plan also spilled over to the oil price in anticipation of further energy demand.”

The deal helped push a broad range of stocks higher, including Caterpillar and Tesla, which both climbed more than 2.5%.

Bank shares also rose on Thursday after the Federal Reserve said lenders had passed stress tests and could resume stock buybacks and dividend payments.

Elsewhere, falling bond yields suggested investors are becoming comfortable with the central bank’s management of the economy and markets.

The yield on the key 10-year US Treasury note, which moves inversely to the price, was roughly flat on Friday at 1.488%, down sharply from a high of more than 1.75% touched at the end of March. The dollar index was down 0.1% to 91.72.

One possible obstacle for markets is the release of the May core personal consumption expenditures price index, the Fed’s preferred measure of inflation, due at 8.30 a.m. ET. Analysts expect a 3.4% increase from 3.1% in April.

“While Fed officials have assured us that all of this is likely to be transitory, a high number could well give the markets pause,” Michael Hewson, chief market analyst at trading platform CMC Markets, said.

Bitcoin slipped 1.8% to $34.226, according to Bloomberg data. The cryptocurrency fell below $30,000 on Tuesday, but investors have since shown willingness to buy the dip.

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US futures rise ahead of jobless claims and Fed speeches, while oil extends rally as outlook brightens

A trader works at the New York Stock Exchange (NYSE) in New York, U.S., February 4, 2020. REUTERS/Bryan R Smith
A trader works at the New York Stock Exchange

US stock index futures climbed on Thursday as investors awaited the release of weekly jobless claims data and prepared to digest a series of speeches from Federal Reserve officials.

Meanwhile, oil prices extended their rally as the outlook for the global economy brightened, with vaccine rollouts spurring expectations of strong demand for energy in the coming months. Oil is on course for a third straight monthly gain in June.

In Europe, stocks rose ahead of the Bank of England’s interest rate decision. It is expected to leave monetary policy on hold but investors will scrutinize the decision for signs of concerns about inflation, which jumped above the Bank’s 2% target in May.

Futures for the US benchmark S&P 500 rose 0.41%, after the index slipped slightly on Wednesday. Dow Jones futures climbed 0.4% while Nasdaq 100 futures gained 0.54%.

Europe’s Stoxx 600 rose 0.59% in early European trading, while London’s FTSE 100 was 0.2% higher. China’s CSI 300 climbed 0.17% overnight while Japan’s Nikkei 225 was flat.

Investors awaited US jobless claims data on Thursday, after a quiet week on the economics front. Economists expect weekly initial jobless claims to drop below 400,000, after a surprise rise to 412,000 the previous week.

John Williams, the President of the New York Fed, and Raphael Bostic, Atlanta Fed President, are among the key central bank officials making public comments on Thursday. Investors will parse their words for any hints about the future direction of US monetary policy.

On Wednesday, Dallas Fed President Robert Kaplan said he thought the central bank would have to start cutting back its support sooner than people expected, moving markets somewhat.

“As we make substantial further progress… I think we’d be far better off, from a risk-management point of view, beginning to adjust these purchases of Treasuries,” he told Bloomberg.

The yield on the key 10-year US Treasury note climbed 1.3 basis points to 1.5% on Thursday. The dollar index slipped 0.08% to 91.73.

Jeffrey Halley, senior market analyst at currency group Oanda, said the light economic calendar means “we will remain at the mercy of Fed-speak and a schizophrenic intra-day market.”

However, investors will get a clearer sense of what global central banks are thinking about inflation and their support packages when the Bank of England makes its interest rate decision at 7.00 a.m. ET.

Elsewhere in markets, oil prices extended their rally. Brent crude rose 0.6% to $75.64 a barrel while WTI crude climbed 0.53% to $73.47.

Prices have risen by almost a quarter in the last three months, as the outlook for the global economy has brightened, and investors feel secure that the OPEC+ group of oil producing countries will closely manage supply.

Bitcoin’s recovery – which saw the price rise above $34,000 on Wednesday and dropping below $30,000 a day earlier – ran into trouble. The cryptocurrency was down 0.4% on Thursday at $32,913.

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Tech stock futures slip as investors brace for a jump in inflation, while bitcoin rebounds after sharp drop

Trader
Investors and traders were bracing for key inflation data on Thursday.

Tech stock futures slipped on Wall Street on Thursday as investors around the world awaited key US inflation data, which is expected to show a sharp rise in prices in May.

Meanwhile, bitcoin rallied after its recent tumble as investors were drawn in by the lower price. The dollar and Treasury yields moved slightly higher.

Futures were mostly flat, with the tech-heavy Nasdaq 100 index down 0.2%. S&P 500 futures down 0.05% and Dow Jones futures up 0.03%.

In Europe, the Stoxx 600 was down 0.08% as the European Central Bank prepared to set monetary policy.

In Asia overnight, China’s CSI 300 rose 0.67% while Japan’s Nikkei 225 climbed 0.34%.

Markets have been subdued for much of the last two weeks, with investors happy to see stocks tick slowly higher as economies reopen. The S&P 500 and the Stoxx 600 have been trading around record highs.

Yet the US consumer price index inflation data, due to be released at 8.30 a.m. ET on Thursday, has the potential to shake markets.

Economists expect CPI to have jumped 4.7% year on year in May from 4.2% in April, which was the highest reading since 2008.

Some investors worry that rising prices could force the Federal Reserve to reduce its support for the economy. Inflation also erodes the real returns on financial assets. Tech stocks, which have soared in an environment of low inflation and low interest rates, are particularly vulnerable.

Markets should be able to digest a consensus rise in inflation, but will start to worry if the Fed begins to shift its position, Alan Ruskin, chief international strategist at Deutsche Bank, said.

“Next week, the [Fed] is going to have a tougher time maintaining exactly the same ultra-dovish posture as the last few meetings, given the inflation overshoot from prior expectations,” he said.

However, Paul Donovan, chief economist at UBS Wealth Management, said he agreed with the Fed’s view that inflation should be transitory.

“The effect of very low prices this time last year and the uncoordinated reopening of the global economy are contributing to reported price increases in specific product markets, but should not last,” he said.

Elsewhere, bitcoin rallied on Thursday as investors moved in to buy the recent dip, after El Salvador’s move to make the crypto asset legal tender restored some positivity to the market.

The cryptocurrency was up 1.4% to $36,900, having fallen to around $31,000 on Tuesday. It remained roughly 43% below April’s record high, but around 25% higher for the year.

Bond yields edged higher on Thursday, with the yield on the key 10-year US Treasury note rising 0.5 basis points to 1.494%. Yields move inversely to prices.

The bond market has, in recent weeks, appeared unfazed by rising inflation. The 10-year yield dropped below 1.5% for the first time in a month on Wednesday. The dollar index climbed 0.15% to 90.26 ahead of the inflation data.

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Jeremy Grantham said US stocks are heroically overpriced, copper should shoot higher, and that he had an ‘overprivileged’ lockdown in a recent interview. Here are the 14 best quotes.

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Jeremy Grantham cofounded the asset management firm GMO.

Legendary investor Jeremy Grantham said US stocks are hugely overpriced, predicted copper prices should shoot higher in the coming years, and that he had an “overprivileged” lockdown in an interview at the Morningstar Investment Conference Australia this week.

The cofounder of asset management firm GMO also ripped into the major oil companies, saying they’re too cynical to engage with. And the 82-year-old said the SPAC boom and the Nasdaq had probably peaked.

Here are the 14 best quotes from the interview.

On the investing landscape

1. “The developed world is merely overpriced, no big deal on its own, but the US is heroically overpriced, and emerging markets is actually fairly cheap… I have complete confidence that if you bought the intersection, cheap emerging market stocks, that you would get a perfectly handsome 10- or 20-year return. And I am pretty darn confident that you will not get a handsome ten-year return from say the S&P 500 or Nasdaq.”

2. “[The] Nasdaq has, by the way, peaked quite a long time ago, two months ago…. This time, my guess is the super SPACs peaked in January, the Nasdaq peaked in February. And maybe in a few months, the termites will get to the rest of the market.”

3. “The super crazies are really anything to do with electrification. EVs, for sure, Tesla is the king of that group, [and] they’re down 30%. The SPAC index is down 30%, the last 10 SPACs having announced a deal are now [trading at] less than the $10 that they do these deals at.”

4. “There is no way copper will not rise hugely from here because of the electrification of everything. And that goes for cobalt, that goes for lithium. And all of the metals except iron and aluminum are really scarce… You have to be reconciled in the long run for a different world of commodity prices.”

On dangers for markets

5. “The higher an asset price is, the lower the return. So having high-priced assets is great for retirees, old folks like me selling off my assets. But for everybody else, it means you compound your wealth more slowly… So I welcome lower asset prices, which I’m confident will come.”

6. “It won’t take bad news. It won’t take a thoroughly bad economy to start bringing this market down. It will take a perfectly good economy and perfectly optimistic outlook, but a little less than it used to be a week ago, a month ago.” – Grantham also spoke of “pessimism termites” that would start to eat away at investor confidence.

7. “You look around and you find that real estate is suddenly pretty bubbly in almost every interesting market in the world… You can’t keep an asset class like housing, where the house doesn’t change, and you’re just marking it up in real terms year after year. Eventually, there’ll be a day of reckoning.”

8. “Don’t pull a Japan. Japan had the biggest bubble in history in land and real estate, bigger than the South Sea Bubble in my opinion. It also had the biggest equity bubble of any advanced country. [Now] 32 years later their land is not back to where it was in 1989 and their stock market is not back in nominal dollars to where it was in 1989. And that’s a perfect example, as the higher you go, the longer and greater the fall.”

On lockdown

9. “We had a totally overprivileged existence. We’re down in beautiful countryside with 50 acres of our own of woodland… And I did quite a lot more research than normal because I wasn’t wasting my time on airplanes. So my carbon footprint was magnificent, and I was reduced to worrying about rather small things like amortizing my tie supply. If I could wear three at a time, I would.”

On the oil companies

10. “The oil industry ran a deliberate campaign of obfuscation, political propaganda, to deliberately mislead the world… That should be criminal. It certainly has had a very damaging effect… It’s cost the world perhaps as much as 10 years of progress on climate change action and government support and sensible regulation.”

11. “I think engagement for the routine concerns [with companies over climate change] is the way to go… But with oil companies, I think they’re simply too cynical and too clever for engagement to count.”

On value investing and venture capital

12. “[Value investing] has had a brutal 11 years. It was the worst 10 years in history for value versus growth. And then last year was by far the worst single year. So you had the worst decade followed by the worst single year… We’ve had a lot of problems over the last 11 years.”

13. “American capitalism seems to me past its prime, a little fat and happy, not aggressive enough. There’s only half the number of people working for firms [that are] one and two years old than there were in 1975. So we’re losing some of our dynamism.”

14. “But there is one thing where the US is still exceptional and that is venture capital. And venture capital is really attracting the best people these days. They don’t go to Goldman Sachs to write algorithms. They go into venture capital or to start a new firm, and they should.”

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