China facing daunting threat of a ‘Minsky Moment’

In this month’s Perspectives magazine: Yves Bonzon’s editorial outlook: The Fed’s bet Macroeconomics: Central banks breeding anxiety Strategy: Correction providing a strategic entry-point Headline news from around the world: Turkey and Australia under the cosh Asset classes: China and the US sewing seeds of discord Topic of the month: Ramifications of the crisis in China’s interbank market Key figures: Interest rates […]

Shift in market regime: outweighing the onset of deflationary tendencies in Europe

Of all the key indicators in financial markets, the most important is the value and trend of the US dollar. Essentially there are three regimes for the American currency. The depreciation regime This is the regime most frequently observed since the end of the Bretton Woods monetary system in August 1971. These phases of orderly depreciation generally correspond to periods […]

Diminishing risks, but economic uncertainties

Hedge funds may have been the winners in the bear market of 2002, but in the crisis of 2008 they were among the biggest losers. Locked in to losses by “gates” and other “side-pockets”, private investors have been disappointed by their performance in the market rally over the past four years. Today aversion to liquid […]

The dilemma facing Europe’s policymakers

Just as investors had begun to regain some confidence in recent months in the EU’s ability to respond appropriately to the crisis of the single currency, the proposed means of financing the bailout of Cyprus’s banks has abruptly reminded them of growing financial repression in the large, overindebted Western economies. As the following chart shows, […]

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A change in the investment regime

Since the secular peak in developed equity markets in 2000, the correlation between gold and stocks, while unstable and complex, has had one consistent characteristic. Since that moment, which marked the beginning of the bull market in gold, stocks have never experienced a bull phase without gold also rising in parallel. It has happened that […]

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2013: a challenge offering some hope in an unsettled climate

Traumatised by the memory of two 50% drops in equity markets over less than a decade, investors have developed an in-built aversion to extreme volatility. Their frantic search for stability has resulted in massive flows to the bond markets and a steady weakening in the flow to equity markets. What are current prospects for returns […]

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Central banks and the mountains of public debt

We consider the metal silver as one of the types of asset most sensitive to quantitative easing (QE). It is already seven weeks since the Federal Reserve announced a fresh round of unconventional monetary stimulus. However, the price of silver had already begun to rise in mid-August as investors began to discount the measures revealed […]

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