A balanced view: Investors wake up to fundamentals

While markets of late have been dominated by positive returns across all asset class, 3 factors drove Equities down in August: US corporate reporting season highlighted the deteriorating health of the underlying business, provided an earnings recession. Trade wars continue to run – the longer they do, the more lasting and permanent the drag on … Continue reading “A balanced view: Investors wake up to fundamentals”

Markets learn to live with some protectionism

On Monday 15th July, President Trump lent the White House lawn to US manufacturers to celebrate the ability of the US to make things for itself. He explained that it is a win-win situation if the US buys products made just down the road, with more and better-paid jobs resulting from the purchases. He signed … Continue reading “Markets learn to live with some protectionism”

Why the world economy is like a wobbly bike

The world economy increasingly resembles an unstable bicycle that can be tipped over by the slightest bump in the road. Three months ago we said “the easing in US-China trade tensions, more flexible central banks and the benefits of lower oil prices should stabilise activity later this year and support an upgrade in our global … Continue reading “Why the world economy is like a wobbly bike”

Whatever it takes…to raise inflation

The European Central Bank has consistently failed to meet its inflation target in the seven years since the region’s sovereign debt crisis. Nor has the market any faith that it might do so in future. With the European Union (EU) elections out of the way, the horse-trading over a host of top EU jobs will … Continue reading “Whatever it takes…to raise inflation”

Waiting for a new interest rate policy

The Federal Reserve Board is re-thinking its whole approach to setting interest rates and controlling credit and money. Its bruising encounters with a falling stock market and an angry President in the final quarter of 2018 left it at a loss to explain why it needed to take action to ease monetary conditions. It had … Continue reading “Waiting for a new interest rate policy”

Japan gets into party mood – how will markets respond?

Japan had been fighting deflation for years since the great crash of its banks and property market thirty years ago. An ageing population saves a lot. Population numbers are falling so GDP will not grow as quickly as in places like the US and UK where migration adds to the numbers. Companies are worried about … Continue reading “Japan gets into party mood – how will markets respond?”

Why Emerging Market Debt’s positive start to 2019 can continue

After a challenging 2018 in which emerging market debt (EMD) logged negative total returns, 2019 has begun with an eye-catching recovery. In the case of EMD sovereigns, all the losses of 2018 were erased by January 2019, and most EMD asset classes have added to or held onto their gains since then. So what next? … Continue reading “Why Emerging Market Debt’s positive start to 2019 can continue”

You still struggle to get an income on safer investments

The difficulties in getting a good return from Western nation bonds. The great crash of 2008-9 has left interest rates in much of the advanced world at very low levels. The fitful and slow recovery this decade has meant central banks have needed to keep rates low. Japan had a similar, if even more dramatic, … Continue reading “You still struggle to get an income on safer investments”

Avoiding a corporate bond liquidity squeeze

Since the global financial crisis in 2008, aging developed-world populations, record low deposit interest rates and quantitative easing by the world’s major central banks have driven a global ‘search for yield’ by investors. For many years, this drove asset yields lower across the risk spectrum. However, since the start of 2018 the investment backdrop has … Continue reading “Avoiding a corporate bond liquidity squeeze”

Will the world authorities do enough to stimulate their economies?

Markets signalled the slowdown now underway in industrial output and investment with a sharp sell-off at the end of last year. They challenged the Federal Reserve in particular to ease its tough stance, which it duly did as 2019 dawned. US policy is to spend more and tax less, offering some budget boost to the … Continue reading “Will the world authorities do enough to stimulate their economies?”

China tries to balance its economy

The Chinese bear market in shares has lasted since the peaks reached in the summer of 2015. The index of share prices for the Shanghai market has halved since June 2015. Then excessive exuberance tempted many domestic buyers into the stock market. A substantial credit expansion allowed people to buy shares on borrowed money. When … Continue reading “China tries to balance its economy”

A slowdown in the world economy worries markets

Japanese interest rates are negative, Euro-area rates are still at zero, the UK official short-rate is at 0.75% and in the US at 2.25%. The Japanese are still running a quantitative easing programme, printing money to buy up state debt, and the Euro-area is doing a little bit more of the same until the end … Continue reading “A slowdown in the world economy worries markets”

Inflation and capacity

There is a danger that central banks will tighten too much. Part of the market plunge during October was a response to tougher money conditions around the world. The Federal Reserve in the US is well advanced with a programme of rate rises. At the same time, it is supervising the rundown of its portfolio … Continue reading “Inflation and capacity”