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 […]
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 […]
he US and European central banks are widely perceived as committed to a path of frantic monetisation in order to avert the risk of deflation. However, the unlimited QE (quantitative easing) of the US and its European cousin OMT (‘outright monetary transactions’ – of peripheral sovereign debt) differ significantly in terms of the likely monetary […]
By the end of August almost all major asset classes had posted positive returns for the year, of between 2% and 15%. With an increasingly gloomy outlook, even for the Chinese locomotive, many observers find this performance puzzling.The answer to the markets’ performance lies mainly in how implicit expectations for growth and inflation have evolved […]
We have only just avoided the worst.The tilting of the Franco-German axis in favour of France after the change of power in Paris was used to extract a vague agreement at the EU summit on 28 and 29 June.The deal is long on promises and short on details. As always, the devil will be in […]
Almost three years ago, the exposure of a clever land swap orchestrated by the monks of an obscure monastery on Mount Athos rocked the then Greek government in a scandal that would expose state mismanagement of assets and plunge Europe into the greatest financial crisis in its history.The revelation of a current deficit close to […]
Alpha can be deined as the extra return generated from actively managing an asset class compared to the return secured by straightforward passive management exposure to an asset class. As, by their very deinition, aggregated returns obtained by all investors collectively must be equal to the return on the market overall, alpha is tantamount to a zero-sum game. Put simply, […]
The first quarter of 2012 ended on a uniformly positive note for risk assets.They were given a boost, initially, by the European Central Bank’s 180-degree shift to an activist approach to monetary policy, and then by persistent and carefully stage-managed rumours of a third round of quantitative easing by the US Federal Reserve. By no […]
By shifting from an allocation structured on the basis of asset classes to one organised along the lines of strategies and risk factors, we are in effect choosing to focus on three very distinct categories of equities. First, at the strategic allocation level, we distinguish between defensives and growth stocks. Second, for the portion of […]
The first of November 2011 will probably come to be seen as a key crossroads in the eurozone crisis – the momentwhenJean-ClaudeTrichethandedthehelmof the European Central Bank on to Mario Draghi.The final year of ECB President Trichet’s term of office only served to confirm what we had been criticising for a number of years: pursuit in […]
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