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Although the oil price has fallen back since the weekend’s attacks on production facilities in Saudi Arabia, it could surge again if there are further strikes or if tensions in the Middle East escalate into a full-blown conflict. In that event, we think …
19th September 2019
Despite what Mr Trump’s tweet yesterday appears to suggest, we don’t think that the ECB is “trying, and succeeding, in depreciating the Euro”. And although we expect the euro to weaken further against the dollar this year, we think that appetite for risk, …
13th September 2019
Italian assets have rallied since a new ruling coalition between the Five Star Movement (M5S) and the Democratic Party (PD) was formed. While we have revised our forecasts to reflect the reduced political risk associated with the new government, we still …
11th September 2019
Although we are revising down our once-bullish forecast for the 10-year US Treasury yield, we think that it has fallen too far and will rebound to 1.75% by the end of 2019 and rise significantly next year. Since early October 2018, the yield has fallen …
6th September 2019
We doubt that stocks that reliably pay high dividends will fare better than their peers during the rest of this year, as we think that bond yields are unlikely to fall much further and might even bounce back a bit. Dividend aristocrats are companies that …
29th August 2019
As the global economy slows, we think that expectations for bank earnings will prove too optimistic and that relatively high bank equity valuations in the US, Canada, Australia, and the Nordics are likely to fall. Bank equities have struggled more than …
28th August 2019
Yield curves have inverted in most advanced economies over the past couple of weeks, including in the US, Germany and the UK, sparking fears of an imminent global recession. While most advanced economies will just avoid falling in a recession in our view, …
23rd August 2019
While the Swedish krona and the Norwegian krone are now near the record lows they reached against the euro in 2008-09, we think that monetary policy and rising risk aversion will push them down further. The Swedish and Norwegian currencies have …
21st August 2019
The Japanese yen has continued to appreciate and is now close to our year-end forecast of ¥105/$. Though the drivers behind its strength may shift, we expect upward pressure on the yen to persist. Since President Trump’s latest escalation of the …
16th August 2019
We think that emerging market (EM) currencies will continue to struggle over the rest of 2019 as the global economy remains weak for longer than investors anticipate, the trade war escalates further and political risks, notably in Argentina, remain high. …
15th August 2019
We think that government bonds in Italy will come under pressure again in the coming months, given the brewing political crisis there and the resulting increased uncertainty over the country’s fiscal policy. Last week, Deputy Prime Minister Matteo Salvini …
Government bonds have rallied further in developed economies in recent weeks, fuelling speculation that they are in a bubble which will burst at some point. We disagree. Admittedly, we think that the rally has gone a bit too far. But we doubt that bond …
9th August 2019
The profits of Corporate America have shrunk during the past four years according to revised estimates recently published by the US Bureau of Economic Analysis (BEA). By contrast, S&P 500 operating earnings per share (EPS) have grown by nearly 50%. …
5th August 2019
The Swiss franc has been the best performing G10 currency over the past three months, despite falling back a bit after the ECB meeting on Thursday. We think that monetary policy as well as safe-haven flows will continue to support it against the euro …
26th July 2019
Judging by their recent performance, more bad news is priced into German than US equities. As a result, if we are right and risky assets around the world come under pressure as global growth slows further, we suspect that the German stock market will fall …
24th July 2019
While we are lowering our end-2019 and end-2020 forecasts for the 10-year BTP yield, we remain pessimistic about the near-term prospects for government bonds in Italy. Back in January, when the yield of 10-year Italian government bonds (BTPs) was roughly …
15th July 2019
Christine Lagarde’s nomination as ECB President makes us even more optimistic about the near-term outlook for government bonds in the euro-zone and reinforces our view that corporate bonds there will hold up better than elsewhere. We have argued for some …
5th July 2019
While the real returns from a wide variety of assets were positive in the first half of this year, we don’t expect the good news to last. We project that those from US equities and government bonds, for example, will both be negative in the second half of …
3rd July 2019
We have long forecast the yen to strengthen to ¥105/$ by the end of 2019, primarily based on our expectation that a sell-off in global equities would boost the demand for safe havens. While we remain of this view, the policy stance of the Bank of Japan …
28th June 2019
While the performance of the US stock market in the Fed’s last four easing cycles was varied, our view remains that it will fall in the next one, which we expect to span from late-summer 2019 to spring 2020. The S&P 500 soared by nearly 15% in the …
27th June 2019
The Fed’s policy stance may breathe some more life into the US economy in coming years. But it could also sow the seeds of the next financial crisis by inflating new asset bubbles. … Is the Fed sowing the seeds of the next financial …
13th December 2012