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Week in review: A crude awakening
Fears over the financial health of Deutsche Bank flustered investors at the start of the week. But signs that energy prices might be rising from their slumber provided some solace, resulting in a positive week…
Active Management
The main criticism of active management is that the cost of performance is expensive relative to passive investing and that most active managers underperform. But funds which have a high “active share” typically outperform. “Active…
Central Banks Guarantee the Next Financial and Economic Crisis
“When the music stops…things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” -Chuck Prince, CEO Citigroup July 2007 “There is only one…
Week in review: What the Fed said
A familiar sense of anticipation settled over investors awaiting the result of the US Federal Reserve’s September deliberation. By and large, analysts and commentators expected the central bank’s interest rate-setting committee to hold firm and…
Behavioural economics and finance
The central tenets of modern portfolio theory and beliefs in rational markets have been found wanting. Critics have observed that Sharpe’s “Capital Asset Pricing Model” (CAPM) and the Modigliani-Miller theorem were written during periods of…
Central Bankers Hold Markets Hostage
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” - Warren Buffett For several weeks, we have intended to write about some of the structural…
Markets Dump after a Cocktail of Negative Issues
Financial markets have just suffered their worst week since February. The catalyst would appear to be a cocktail of rising bond yields precipitated by either concerns over a potential rate rise from the Fed or…
Ranges Have to Break at Some Point
Last week, we set out the case for being constructive on the US Dollar. Although the resilience of the Dollar in the face of weak data is impressive, in reality the Dollar, along with bonds…
Week in review: Political Olympics
Just four days after the closing ceremony of the 2016 Rio de Janeiro Olympics, the final proceedings in the impeachment of Brazil’s former President Dilma Rousseff began. Re-appointed by the Brazilian electorate less than two…
The Market’s Reaction to Jackson Hole Demands Attention
Before we get on to the events of Jackson Hole and their impact on bonds and FX, we just wanted to pick up on where we left last week. We outlined some initial thoughts about…
Current Economic Thinking May Need to Change
Having taken my family holiday in July, I had actually been hoping that August would see a pick-up in volatility and offer some trading opportunities. However, with trading ranges compressed and the post Brexit rally…
Week in review: League of nations
As the Rio Olympics draw to a close, newspapers and television alike are obsessing about Team GB’s place in the medal table. Will we outrank China? Celebrating individual excellence seems to have taken second place…
Week in review: Her name is Rio …
It was all eyes on Rio de Janeiro this week, as the Games of the XXXI Olympiad got into full swing. As is now traditional at such celebrations of human sporting prowess, the efforts of…
A Quiet Week but There is Always Something to Look Out For
Not only were financial markets extremely quiet last week, but the recent trend of every asset going up whilst the US Dollar nudges down remained intact. With trading volumes very much in holiday mode, we…
A Positive Cocktail for Risk Assets – Can it get any better?
Another dovish central bank and another strong US employment report, and investors are tripping over themselves to increase risk in their portfolios. With many now also focusing on holidays, the next few weeks are likely…
Week in review: Desperate times
On Wednesday the result of the most wide-ranging survey of British businesses since the Brexit vote was released. The purchasing managers’ index showed the sharpest fall in business activity for 20 years, and follows a…
Simplicity
Simplicity is not just a business and regulatory imperative. Investor revulsion at the global financial crisis has led to a renaissance for simplicity. Certainly the complicated mathematical models so beloved in some quarters of finance…
A Very Important Juncture for Central Banks and the Economy
We want to try and cover a few areas this week. According to the headline data, the US economy remained weak in Q2 and the European economy slowed a bit. There are grounds for both…