Market Turbulence

Market falls never feel pleasant, but for those with long-term investment horizons there is no need to panic. Fluctuations, sometimes significant ones, are to be expected during the course of investing; and for those requiring the assurance of no fall in capital the only asset class that can be considered is cash. This is the … Continue reading “Market Turbulence”

Wobbly times

Stock markets have started to wobble. A sell-off in Asia has spread across the globe. Having been talked about for months, is the sell-off finally here? The catalysts for the sell-off are varied: certainly, the prospect of higher interest rates in the US is playing a role as the Federal Reserve seeks to cool an … Continue reading “Wobbly times”

How to survive a zombie company apocalypse

Zombie companies do exist but are not staffed by people that behave like extras in the “Walking Dead”. Actually, a zombie company is a technical term for a business which, if it is not yet numbered among the undead, is only earning just enough cash to pay the interest on its borrowings. It does not … Continue reading “How to survive a zombie company apocalypse”

The forgotten bear market in China

In the summer of 2015, the Chinese authorities overdid their enthusiasm for wider share ownership. With their general encouragement, brokers advanced large sums to individuals to buy shares. A buying frenzy developed in the markets and the Shanghai index hit a new high of 5,166 in June. The government decided things were getting out of … Continue reading “The forgotten bear market in China”

China’s growth surprise is just the start

With the impact of tariffs yet to show up in the data, and the looming threat of a property slowdown, the larger-than-expected slowdown in Chinese growth is a taste of things to come. The larger-than-expected slowdown in reported Chinese GDP, to 6.5% from 6.7% in the second quarter, has seemingly spooked markets and pushed policymakers … Continue reading “China’s growth surprise is just the start”

EU caught up in internal war of words

The President of the EU Commission had some choice words to say about the Italian budget dispute. Jean-Claude Juncker argues that Italy has to keep to strict budget limits on spending and borrowing that has been laid down by the EU. He went so far as to suggest it would mean the end of the … Continue reading “EU caught up in internal war of words”

Panic not: earnings season matters more than the current rout

Once again, markets are roiling. As with so many sell-offs, this is a story of pressure building steadily until it must vent. Volatile markets are here to stay, but the next few weeks will tell us whether this episode is a sign of something more ominous to come or just another bump in the road. … Continue reading “Panic not: earnings season matters more than the current rout”

Bond vigilantes at the gates in Italy

The 2019 budget target was unveiled on 27 September 2019, with the government defying the advice of Giovanni Tria, Italy’s Minister of Economy and Finance. Tria had recommended a deficit1 of 1.6% of GDP; however, the target has been set at 2.4% of GDP. Italy is now on a collision course with the European Commission, … Continue reading “Bond vigilantes at the gates in Italy”

Trade and banking matters hit China

The Chinese economy is one of the two giant economies in the global market. We have got used to relying on China to produce growth of more than 6%, and to supply a wide range of manufactured items at attractive prices. The combined effects of a huge expansion of Chinese manufacturing capacity, and the digital … Continue reading “Trade and banking matters hit China”

Will Trump policy hasten the collapse of the dollar?

The world’s acceptance of the dollar as its reserve currency has been positive for Americans. But with Donald Trump’s America First policy, will the world move away from the greenback. When world leaders laughed at Donald Trump’s comments in his address to the United Nations last week, it was an insight into the new world … Continue reading “Will Trump policy hasten the collapse of the dollar?”

Europe’s struggle to break free

At the start of 2018, it looked likely that interest rates could start to rise across Europe, signalling the end of the necessary post-crisis readjustment in the financial sector. However, as is often the case, the themes that drive markets at the start of the year can often be forgotten by the end. As 2018 … Continue reading “Europe’s struggle to break free”

How much damage will the trade war do?

Trade wars are not good news. Mr Trump’s imposition of tariffs on another $200bn of Chinese exports helped drag eastern markets down ahead of the event. Forecasters and pundits fear that the tariffs will curb exports and activity in Chinese factories, push up the price level a little in the US and adversely affect the … Continue reading “How much damage will the trade war do?”

Trade wars step up, more to come

The US has announced tariffs on another $200 billion of imports from China, citing ongoing concerns over the theft of technology and forced transfer of intellectual property. The tariffs take effect next week and are initially set at 10% rising to 25% from 1 January next year. China has yet to respond, but the White … Continue reading “Trade wars step up, more to come”

The Only Game in Town

The US stockmarkets were the only game in town in August. US stockmarkets provided the only positives in August posting another month of strong gains due to robust economic news-flow.  However, all other major global regions showed negative returns, with geopolitical issues and trade war concerns weighing on investor sentiment. The overall result was a … Continue reading “The Only Game in Town”

Hubris and Nemesis: insights into the financial crisis

Ten years ago, the demise of Lehman Brothers marked the height of the financial crisis. At the time, I was an economist at one of the UK’s largest financial institutions. Working there gave me abundant insights into the psychological biases at play, both in that institution and in the companies that it supported. Many of … Continue reading “Hubris and Nemesis: insights into the financial crisis”