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Data Update 3: Inflation and its Ripple Effects!

Musings on Markets

Interest Rates and Inflation Inflation and interest rates are intertwined, and when their paths deviate, as they sometimes do, there is always a reckoning. Put simply, no central bank, no matter how powerful, can force market interest rates down, if inflation expectations stay low, or up, if investor are anticipating high inflation.

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Interest Rates, Earning Growth and Equity Value: Investment Implications

Musings on Markets

The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. for 2021 and inflation of 2.2%

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Data Update 2 for 2022: US Stocks kept winning in 2021, but…

Musings on Markets

In a post at the start of 2021 , I argued that while stocks entered the year at elevated levels, especially on historic metrics (such as PE ratios), they were priced to deliver reasonable returns, relative to very low risk free rates (with the treasury bond rate at 0.93% at the start of 2021). The year that was.

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Inflation and Investing: False Alarm or Fair Warning?

Musings on Markets

Looking at US equities, the S&P 500 is up about 11% and the NASDAQ about 5%, from start of the year levels, and the underperformance of the latter has led to a wave of stories about whether this is start of the long awaited comeback of value stocks, after a decade of lagging growth stocks.