Weekly Highlights

Weekly Highlights 15 Sep: Passive has overtaken active

#1 Passive has overtaken active

It’s official. Asset under management (AUM) in passively managed instruments have surpassed the AUM in actively managed instruments. The next big question, will the market continue to function ‘properly’ as the market share of passive instruments continue to climb? Coincidentally, Michael Burry recently came out to slam on the rise of passive investing, comparing them to CDOs.

Not sure if it is a fair comparison to compare an opaque product to a passive instrument which is very transparent. But hey, I am no Michael Burry.

https://www.bloomberg.com/news/articles/2019-09-11/passive-u-s-equity-funds-eclipse-active-in-epic-industry-shift

https://www.cnbc.com/2019/09/04/the-big-shorts-michael-burry-says-he-has-found-the-next-market-bubble.html

 

#2 ECB lowered fund rates. US Federal Reserve to follow suit? 

In addition to the lowering of the fund rates from -0.4% to -0.5%, Draghi has revived bond purchases which surprised many markets participants. Trump called for a similar negative interest rate policy from the US Federal Reserve. Oh dear!!

Is a negative interest rate the new normal for our future generation?

More stimulus for the drunken market? I guess we are down the road of no return. Central banks are leashed to the whims of the financial market. More ‘fun’ times ahead!

https://www.reuters.com/article/us-ecb-policy/ecb-to-turn-stimulus-taps-back-on-to-prop-up-ailing-economy-idUSKCN1VW2SN

https://www.reuters.com/article/us-usa-stocks-weekahead/with-rate-cut-likely-market-wonders-how-low-fed-will-go-idUSKCN1VY16F

 

#3 HKEX proposed to buy LSE but got rejected instead

The Hong Kong Stock Exchange (HKEX) proposed to buy the London Stock Exchange (LSE) for $39 billion but got rejected by LSE. Some analysts speculate that HKEX may counter with a better offer. The initial proposal from HKEX comes with the condition that LSE dropped the acquisition of data analytics firm, Refinitiv.

https://www.reuters.com/article/us-lse-m-a-hkexlse/london-stock-exchange-flatly-rejects-hong-kongs-39-billion-takeover-offer-idUSKCN1VY19O

 

#4 Boeing making a comeback with 737 Max

Not sure about you guys, but I am sticking with AirBus. The amount of deception by Boeing behind all the crashes is criminal in my opinion.

https://www.reuters.com/article/us-ethiopia-airplane-boeing-logistics-fo/crisis-hit-boeing-readies-huge-effort-to-return-737-max-to-the-skies-idUSKCN1VY1NV

60 Minutes Australia documentary on the 737 Max accidents: https://www.youtube.com/watch?v=QytfYyHmxtc

 

Have a good week ahead.

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