April/May 2019 - Introduction -

April has been a month of new record highs on most indexes. The S&P 500 IT sector valuation is now nearing a 20 P/E ratio, while being at 14 in the last week of December 2018. Complacency can be seen all over the place, and fundamentals are looking increasingly worrying.

Earnings growth slows to the lowest level since Q1 2016, global trade volumes are falling at their fastest pace in a decade, U.S. wholesale inventory is at its highest level since 2009 (don`t believe it when Trumps says this is good for the economy, it shows that there`s just more supply than demand, simple as that). 81.4% of borrowers who refinance their mortgage, take out cash off their homes (last time it was this high, it was late 2007 at the dawn of the global financial crisis). And last but not least: Germany`s factory orders have now declined at its fastest pace since the global financial crisis and is down by a massive 8.4%.

Fundamentals say that a worldwide recession is around the corner, while most markets in the developed world act like nothing is happening, and we are just at the start of a decades long economic miracle.

While Mr. Market is never wrong, it can stay irrational much longer than anyone expects. I expect it to catch up to reality sooner than later, and no central bank that can do anything against it (unless we`d consider a hyperinflation scenario, where the markets can go up by thousands of dollars, but its real value actually declines).

I will show you a lot of charts that will indicate a decline in various sectors, in different countries around the world, together with the market`s irrational response to it. As you might have expected, the most irrational sector is once again the tech sector, which is behaving like it`s 1999 all over again.
This will be the last monthly newsletter, after which I will switch to a weekly edition. This is necessary to stay up to date to the latest developments, as they move incredibly quickly. Over the past 2 months i`ve seen myself rewriting the entire newsletter, just because the narrative has completely changed within a matter of weeks.

Enjoy the ride, and don`t forget to stay positive after reading this newsletter, this too shall pass!

Robbert-John Sjollema

The information contained in this publication is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in this publication is that of the publisher and is subject to change without notice. The information in this publication may become outdated and there is no obligation to update any such information.