He was not a member of the Argentine Industrial Union (UIA) the one who raised the divergence between stock markets and the real economy. It was my children, this last weekend. Did you find out from the media? No. Their father and friends have been telling them about the increases for months; years.
Euphoria for the elderly will be when poverty decreases consecutively, health, education and security improve. Because as Plato said: there are no perfect systems, but the duty of the sovereign is to make a good system for the majority of the population.
But financial specialists speak of euphoria. They must be very young. They should consult little. Because of financial euphoria, the memories are always close. Like when a minister went on television to talk about the $900 Merval… thirty years ago. How much should that Merval be worth today just adjusted for inflation?
Euphoria is something else. Are there many countries with fiscal and trade surpluses, whose sovereign bonds, which promise to pay US$100 in 2030, are worth US$53? Is that euphoria? No, euphoria is when your business officer tells you that local bonds yield so little that it is better to sell them and buy Moroccan securities.
Euphoria is when you go from category to category. From Frontier to Emerging and, from there, to Investment grade. But you are Stand Alone. It’s off the map.
Euphoria is when the market is leveraged and not like now, where Pass and surety rates are low, and the volumes of the local market are not news.
Euphoria is when the general panel burns and the hallway comments “there are no papers.” None of this has happened yet.
We don’t have the truth but, at least, let’s try to think. In these conditions of twin surpluses, bonds should naturally continue rising and, consequently, country risk falling, interest rates are lower and when making valuations, analysts will discount fund flows, in such a way that the value present of listed companies will be higher.
What if from these rate drops, credit starts with energy and, from there, the banks work for what they were created for and mortgages are reborn? Is that what economists are thinking about when they talk to you about a “V” rise in GDP?
So we will talk about those times, that the market only got ahead of itself.
We will tell you once again that the chain of financial happiness starts with low yields on bonds, then it turns to stocks and, finally, to properties. Although logic has not occurred here in recent years, since the actions started first. But because we are weird.
When we see reality, perhaps it is time to get off the horse, because there you will read the headlines in the newspapers about the euphoria of the Stock Market. Or, quite the opposite, of course.
President and founding partner of Silver Cloud Advisors.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
