Afterpay bubble bust resumes

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Some stock markets are at all-time highs, but beneath the bonnet, there is also a vast bust going on owing to what strategists call “factor rotations”.

The key rotation for the past few months has been a gallop out of growth stocks and into value. This is driven by rising inflation expectations and yields which encourage investors to sell long-duration assets and buy shorter ones.

Pretty much the longest-duration asset available in the market is the tech growth stock with no earnings. It is leveraged to infinity. So it is being slaughtered.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.