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War by other means – interest rates
War by other means? Forget the South China sea, Syria or Korea. If you haven’t noticed, the EU and China are locked in a high stakes game of chicken with the US over control of the World’s reserve currency, where the weapon of choice are interest rates. While much has been made of Trump’s attempts […]
Continue readingAre 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 readingWhining about US winning
So if Trump’s tariffs are going top hurt the US so much why is the US dollar going up by so much? If Trump’s tax reductions are going to increase the budget deficit, why are currency markets so unconcerned? It is because currency markets understand Trump is going to win. His tax cuts are […]
Continue readingGDP driven rate increases in the US threatens to pummel an already challenged ECB QE policy
Equity markets were widely reported to have bounced on Friday after the solid May private sector job growth, albeit the accompanying rise in average hourly wage growth presages another rate rise by the Fed. With EU’s grip on its southern flank unravelling as friendly regimes in Spain and Italy are replaced however, the prospects of […]
Continue readingWeaning consumers off the debt fix – maybe
Well that seemed short-lived. Perhaps the bounce in US equity markets on the February non-farms was just a one day wonder. The numbers however, weren’t too shabby for equity prices; the combination of a better than expected net job growth (including upward revision in the January guesstimate), but with a lower pace of average wage […]
Continue readingUS light vehicle sales for August
GM provided the standout in August, with its heavy incentives clawing back some of its earlier shortfalls in sales to deliver a +7.4% YoY improvement in domestic unit sales for August and bringing its YTD average to -2.4% and therefore slightly ahead of the overall industry’s -2.7% YTD decline as well as its principal domestic […]
Continue readingIs Italy too big to fail?
Is Italy really limbering up for a rejection of the Euro and a return to the lira, or just bluffing? The narrative would appear to be, that if the ECB won’t bail out the Italian banks with fresh Euros, then Italy should do it itself by returning to the Lira. Whether the threat cuts much […]
Continue readingBrexit sitzkrieg
Over three months on from the Brexit vote and the World still turns and UK economic activity has been largely unaffected, with August retail sales up +6.2% YoY and September data showing UK consumer confidence index returning to pre-referendum levels (GfK) and UK manufacturing PMI (Markit) hitting 55.4, the highest level since May 2014. Lower […]
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