The Financial Times – Investors block out political noise to focus on earnings Ignore the noise, they have said. Markets trade on so-called fundamentals — operating performance of companies, interest rates and valuations. While stock market valuations have been indisputably high this year and interest rates are seen rising, earnings growth has been great: 13.9… Continue reading Investors Focus On Earnings
The Financial Times – Tony Barber: The Catalan crisis poses a threat to the European order The nationalists’ push for independence risks opening a Pandora’s box of problems The Catalan crisis is of enormous concern to European governments on multiple levels. The Catalan secessionists’ decision to hold a referendum on independence on October 1, in… Continue reading Why The Catalan Crisis Matters To Europe
The Economist – Schumpeter: Goldman Sags For the first time, the famous investment bank has more of a business than an image problem While outsiders think that Goldman’s alumni run the world, on Wall Street the firm’s aura has dimmed. Rival banks view it with indifference, not awe. After shining in the years after the crisis,… Continue reading Is Goldman Sachs In Trouble?
Summary Global fund flows to risk assets are running hot. Similar risk-on extremes have not generated substantial draw-downs, but under-performance by small-cap and values stocks. Additionally, financial and industrial sectors have incurred the most damage. Comment Investors have again pushed global fund flows to risk-on extremes this past week. We use BofA’s Global Flow Index,… Continue reading Global Fund Flows at Risk-ON Extreme
Comment Commodities were left behind in the September revival of the reflation trade. The strengthening dollar blunted rallies in industrial metals and sent year-over-year returns for commodities broadly lower. The only exception was livestock, which has seen some impact from Hurricane Harvey. We last looked at commodity returns in August, arguing that low correlations among… Continue reading Commodities Still Pointing to Low Volatility, Low Growth
The Financial Times – Gold’s great rally of 2017 faces twin threat Gold has quietly staged a spectacular rally for much of 2017. A combination of a weaker dollar and an ever changing menu of geopolitical risks, most recently the belligerent rhetoric between the US and North Korea, has propelled the yellow metal up 15… Continue reading Is Gold Losing Its Luster?
Bloomberg – A Volatility Trap Is Inflating Market Bubbles A number of markets show not only elevated valuations, but also irrational investor behavior. Investors face a conundrum: The world is experiencing a record synchronous growth phase, but an increasing number of assets are becoming overvalued just as fundamental risks lurk in the background. Should investors… Continue reading More Moaning Over Low Volatility
Risk.net – Global trends in institutional ETF trading Sponsored survey report: Jane Street It incorporates responses from 210 institutional investors – 86 from the US, 79 from Europe and 45 from Asia – alongside qualitative interviews with a number of market participants. Bloomberg.com – Investors Concerned About High-Yield ETF Liquidity, Survey Shows Most institutional investors are concerned about… Continue reading Worries About ETF Liquidity
The Wall Street Journal – Grep Ip: Donald Trump’s Fed Choice: Continuity or Disruption The president’s decision will come down to how happy he is with the central bank’s monetary policy n less than three weeks, President Donald Trump plans to announce who will run the Federal Reserve when Chairwoman Janet Yellen’s term ends… Continue reading The Race For Fed Chair
Bloomberg – Trump Makes Gauging Puerto Rico Bondholder Losses Even Harder Puerto Rico bondholders were already struggling to gauge how much they’d be repaid once the island finishes with its record-setting bankruptcy. Then President Donald Trump got involved. The price of Puerto Rico bonds tumbled to a record low Wednesday after Trump said the beleaguered… Continue reading Puerto Rico’s Debt
The Financial Times – Fed has no reliable theory of inflation, says Tarullo Central bankers are steering the economy without the benefit of a reliable theory of what drives inflation, a former top Federal Reserve policymaker said, as he called for policymakers to pay less attention to theoretical models and more to actual data. Daniel Tarullo,… Continue reading The Fed Is Making It Up As They Go Along On The Inflation Front