How to analyze a 10-K
Source: Compounding Quality / Chris Quinn
This is not the price chart of a meme stock going under or a "pump and dump" altcoin
This is the Austria AA+ 100 year bond being hammered by the rise of bond yields... The price of the 100 year Austrian government bond has plunged near all-time lows and is trading 72% below its All-Time-High. Source: Bloomberg, HolgerZ
Orange juice futures are trading like a meme stock! The surge is mainly driven by #supply driven (exarcebated by speculators positioning). The 2 supply issues are the following:
1/ Extreme weather intensified by global heating ravaged this season’s crop of the citrus fruit: last year Florida, which produces more than 90% of the US’s orange juice supply, was hit by Hurricane Ian, Hurricane Nicole and freezing conditions in quick succession, devastating orange producers in the Sunshine State. 2/ A bacterial disease -> Florida Producers battled an incurable citrus greening disease that is spread by an invasive insect, rendering fruit unusable. Most infected trees die within a few years, and some producers said they were giving up farming and selling their land. Industry figures said US orange production would reach its lowest level for more than a century. Source: The Guardian, Longview Economics
Why this time is different (I know this is a dangerous sentence...)
Asset managers are very long 10-year futures, expecting yields to fall from here! This is a very different set-up than in 2007 when asset managers were expecting #yields to rise... Source: Bloomberg
US equities: absolute & relative valuations offer a different perspective
•On the positive side, market (absolute) valuations have improved as stock prices have dipped and earnings have held up •On the negative side, the rise in bond yields imply a lower Equity Risk Premium (ERP), now at 39bps (19-year low), i.e equities are more expensive vs. bonds than at the start of the Summer... Source: Edward Jones, BofA
The number of unicorns is plummeting
Since 2018, over 250 new unicorns have been minted each year, with the exception of 2021, when this number spiked to 787 – a rate of more than two unicorns per day. In 2022, new unicorn creation collapsed in 2022. Peak to trough there was a 90% drop in the new unicorn rate within five quarters. Just 21 new unicorns were created in Q1 2023. Source: Dealroom.co, TME
The Bank of Japan is purchasing government bonds at a record pace this year
A factor that likely prompted its recent move to allow larger yield movements to reduce the strain on its control of longer-term #interestrates. Source: Bloomberg
Disinflationary forces are intensifying in Germany
Producer Prices drop for 1st time since 2020, a good leading indicator for Consumer Prices. In July, producer prices (PPI) fell by 6.0% YoY, the biggest decline since October 2009, when the financial crisis has caused prices to collapse. Last year, the prices received by manufacturers for their goods had at times risen at a record rate of 45.8%. Source: HolgerZ, Bloomberg
