When smooth waters cause ripples

It is proving to be a healthy quarter of results for US banks and the outlook is fine, regardless of what might or might not happen about regulation. The banks have decent economic growth to thank for much of their own health. Higher interest rates have been good for bank lending and net interest margins … Continue reading “When smooth waters cause ripples”

New Dawn for India’s Solar Dreams

India isn’t a country you would associate with environmental stewardship. The Ganges River, an object of veneration for Hindus, is famously polluted; the country hosts 13 of the world’s 20 most polluted cities, according to the World Health Organisation; last year you could even see the smog hanging over New Delhi from outer space. Indeed, … Continue reading “New Dawn for India’s Solar Dreams”

Putting politicians on pedestals only leads to disappointment

It is hard to overstate the expectations resting on Emmanuel Macron’s shoulders. He has only just been elected and already he is being heralded as Europe’s saviour. But high expectations can easily drift into unrealistic ones. A little circumspection would better serve us all. Macron’s ascent is certainly remarkable. His party didn’t even exist eighteen … Continue reading “Putting politicians on pedestals only leads to disappointment”

Curve ball

Governments aren’t the only things proving to be less than strong and stable these days. Take the Phillips Curve, which describes the relationship between unemployment and wage growth. As unemployment falls, using up spare capacity in the labour market, it makes intuitive sense that wage growth starts to pick up. Given the key role played … Continue reading “Curve ball”

A-Shares: All Quiet on the Eastern Front

Two years ago this month (June) China’s A-shares (shares that trade on the Shanghai and Shenzhen stock exchanges) reached their highest level since the global financial crisis, after rocketing almost 80 per cent in six months. The market then slumped more than 43 per cent over the subsequent 11 weeks. Shares of companies that are … Continue reading “A-Shares: All Quiet on the Eastern Front”

Green is the new black

There is a new breed of bond in the fixed income world. It’s different, it’s bold – it’s the so-called ‘green bond’ market. As the drive towards environmental, social and governance (ESG) investing continues to gather pace, policy makers and investors alike are waking up to the importance – and benefits – of green bond … Continue reading “Green is the new black”

Has unconventional monetary policy had its day?

“People will always try to stop you doing the right thing if it’s unconventional,” so said Warren Buffett in an interview for Time magazine in 2008.  Buffett wasn’t referring to monetary policy specifically, but there’s some truth in his adage if we apply it to the more controversial tools that central banks have used since … Continue reading “Has unconventional monetary policy had its day?”

Fed policy: it’s conditional

Remarkably few economic decisions depend directly on the interest rate set by the US Federal Reserve (the Fed). Yet with this tool, the central bank is able to exert vast power over the US economy and to steer it towards the Fed’s dual mandate of full employment and 2% inflation. The key to understanding how … Continue reading “Fed policy: it’s conditional”

Why Trump makes the case for emerging markets

Donald Trump’s first weeks as US president are turning out to be just as controversial as his bruising election campaign. A flurry of executive orders on border controls, trade and healthcare has dominated headlines, causing dismay and galvanising opposition. The drama unfolding on a daily basis makes the modest comeback that developing markets have been … Continue reading “Why Trump makes the case for emerging markets”

A decade to forget for savers

It is a decade since the start of the financial crisis. What started in the US housing market later engulfed the global economy and is having an enduring legacy on the UK – perhaps most notably on savers. The first signs of the financial crisis emerged in April 2007 when New Century Financial, a US … Continue reading “A decade to forget for savers”

The Bank of England: Having it all

Are you in favour of having your cake and eating it? If so, the Bank of England’s latest forecasts are for you. They show the Bank expecting a pick-up in the UK’s growth rate, with little change to the inflation outlook. This is an unusual combination: normally, inflation rises when activity accelerates, as spare capacity … Continue reading “The Bank of England: Having it all”

European private equity: 2017 outlook

At the start of 2016 there was little in the tea leaves to foretell of imminent global political upheaval. The private equity outlook was, for many, ‘business as usual’. The previous year’s shocks had been mostly limited to the Syriza Party’s electoral victory in Greece and a Chinese renminbi devaluation. Fast forward to the end … Continue reading “European private equity: 2017 outlook”

Trump in the White House – all expectations out the window

The election of Donald Trump as the next US president has been a game-changer thus far for fixed income markets, upending all expectations of what will happen next. One thing is for sure, though: Trump’s policies will have a major, far-reaching impact on bond markets. Trump has promised two broad changes – greater fiscal stimulus … Continue reading “Trump in the White House – all expectations out the window”

World leaders gather in Davos

The 2017 gathering at the World Economic Forum in Davos takes place this week against an almost unprecedented backdrop of global political and economic uncertainty. The ramifications of the UK’s vote last June to leave the European Union are extensive. Re-setting the trading and political relationship will be a multi-year process that will result in … Continue reading “World leaders gather in Davos”

Japan traps to avoid in 2017

Discerning equity investors who focus on quality companies not temporary tailwinds can find pockets of growth in Japan the coming year. In the month since Donald Trump’s election upset, Japan’s Topix climbed 17% in US dollar terms. Almost half of this performance came from a resurgent dollar. Given the close historical correlation between Japan’s stock … Continue reading “Japan traps to avoid in 2017”