Oil is on a losing streak. 12 consecutive days of falling prices led to a rise in high yield spreads. Because this decline has been largely supply-, rather than demand-driven and on the front-end of the forward curve, we are not overly alarmed about the long-term prospects of the oil price at this point. However, […]
One-time Remain advocate, Jo Johnson (brother of leading Leave campaigner Boris), resigned from his position as minister of transport in protest at Theresa May’s handling of Brexit negotiations. Johnson’s departure signals an increased risk of no deal or a second referendum in our view, with a high level of uncertainty around the outcome persisting. Sterling’s […]
Several factors halted the equity sell-off last week. Investors continued to take a jaundiced eye of some corporate guidance, but Q3 earnings growth has finally turned out as good as in previous quarters (around 25% year on year for the S&P 500). The sky has seemed to brighten on other fronts too. Most conspicuously, oil […]
Last week’s continued equities sell-off was driven by disappointment with the earnings reporting season. Having propped up market returns for much of this year, tech’s poor performance was particularly noteworthy. Last week, below-expectation metrics from Amazon and Alphabet (Google’s parent company) flattened the S&P 500’s returns for 2018, while European equities have been much more […]
Italian bond prices regained some ground after Moody’s cut Italy’s credit rating by one notch on Friday, keeping it within investment grade, while upgrading its outlook from negative to stable. Investors welcomed this as positive news while they anticipate Italy’s response to Brussels’ criticism of its proposed 2019 budget due later today. This could prove […]
US equities declined roughly 7% over six days up to last Thursday. While the decline is in line with the median drawdown level since 2007, it was notable for its length, given the average drawdowns over the same time period lasted 40 days, rather than six. Most likely, investors were reacting to the higher risk […]
Far-right presidential candidate Jair Bolsonaro claimed victory in the first round of Brazil’s elections on Sunday, albeit he did not obtain the over 50% of the vote required to secure a majority and avoid a run-off. Markets have grown more positive toward Bolsonaro since the start of his campaign and we think Paulo Guedes is […]
The Italian government’s budget deficit target is 2.4% for each of the next three years. It could have been worse: at one stage, the populist coalition’s spending plans looked like raising the deficit to 6%. But its actions set the stage for a clash with Brussels, while Italy’s credit rating could be downgraded in the […]
Today’s kicking in of US tariffs on an extra USD200bn of Chinese imports, and China’s retaliation, marks a notable escalation in the trade war between the two countries. But markets prefer to look at the robust US economy, with strong M&A activity also helping (of which Comcast’s winning bid for Sky is just the […]
September 15 marked the 10th anniversary of Lehman Brothers’ filing for Chapter 11 bankruptcy protection. Since Lehman’s collapse has come to symbolise a massive financial crisis whose consequences continue to be felt, it is natural for this anniversary to be the occasion for speculation on when and where the next large-scale crisis might occur. Emerging […]
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