Below are some of the most interesting things I came across this week. Click here to subscribe to our free weekly newsletter and get this post delivered to your inbox each Saturday morning.
STAT
The Financial Times reports, “Just because investors have never before realised positive 10-year real returns when investing at CAPE above 37.3x, doesn’t mean they can’t. This time may be different.”
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Clearly, retail investors are betting this time is different. They have poured record sums into the stock market this year as, “the dip-buying belief has become the new religion.”
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Overseas investors, on the other hand, have become a bit more circumspect lately. A Hakyung Kim reports. “the post-liberation day gains have been mostly a domestic phenomenon, whereas the sell-off earlier this year took place across time zones. This suggests international investors were a driver of the sell-off, and they haven’t returned in force since.”
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Perhaps they are just more attuned to signs in the markets that suggest an important change is underway. As The Daily Chart Book reports, “The average correlation between Equities/Treasuries, Treasuries/US Dollar and US Dollar/Equities has been positive over the past 6 months. This is significantly different than the past 15+ years.”
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And the real opportunity may lie outside of the major stock market indexes. “Whenever the commodities-to-gold ratio plunges to an extreme low and then turns up it has in the past flagged the start of new and substantial cyclical bull markets in commodities,” writes Callum Thomas.
