Brexit means Brexshit!

Confused? You certainly should be as the political game of betrayal over Brexit reaches its denouement. In the very short term, markets (both fx and equity) are unfazed by the ‘deal’ being foisted on them, as they have already been softened up by the project fear propaganda – ‘any deal is better than no deal’.  […]

Continue reading

Pearson – resorting to one-off non-cash tax items to try and spice up a tired recovery story

Pearson was for a while the darling of the sector, with a recovering top line supported by substantial cost reductions and an fx tailwind from the appreciation in its principal trading currency, the US dollar. Beyond this however, there was only limited evidence that the ship is being turned about, in terms of what really […]

Continue reading

PPG – rising costs exposes weak pricing power. An increasingly common story

Tax reductions, tariff walls and a trillion dollar plus increase in Federal debt to fund the party and one might have thought that bond markets would be fretting about inflation. Perhaps surprisingly and despite the absence of Fed price distortions as a buyer of its own junk, the inflation rate implied from the TIPS-fixed Treasury […]

Continue reading

Are equities expensive?

The spike in US bond yields has implications for equities, but perhaps not as directly as one might imagine. Yes, long bond yields and particularly TIPS, provide an effective proxy for a risk-free return and therefore the essential anchor for valuing other asset classes, but only from a relative rather than absolute perspective.  It may […]

Continue reading

Dangerous Waters

These are dangerous waters for investors. Not just from the visible reefs, such as the rising trade and military tensions, but to what remains hidden, as Trump positions himself ahead of what could prove to be the most important mid-term elections for a generation. This is a game however, where many of the key pieces […]

Continue reading

European Telecom sector – protracted investment cycle, or just a value trap?

Do telcos have pricing power; is the sector at the cusp of an upswing as it comes out of a protracted investment cycle, or just a value trap? For those despairing at the billions already being chucked at 5G licences (€6.5bn last week in Italy) before they’ve extracted much of a return from 4G, one […]

Continue reading