Monthly Archives:

October 2009

An update on our views on the economy and fixed interest markets

Jim and Richard recently gave a teleconference on fixed interest markets to our clients. In it they address a number of key questions including the outlook for inflation, interest rates and bond markets generally. They also touch on how a number of our funds are positioned at this current point in time. The final half an hour of the call features Jim and Richard answering a number of topical an…

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Chipping away at inflation

This week saw the 15th anniversary of the first ever web banner ad. HotWired (now defunct) was the first web site to sell banner ads in large quantities to a wide range of major corporate advertisers. HotWired coined the term “banner ad” and was the first company to provide click through rate reports to its customers. It was paid for by American telecommunications company AT&T.  And here it is:…

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UK still in recession, but actually the numbers are almost meaningless

Preliminary UK Q3 GDP numbers were pretty shocking.  Headline writers will have a field day, and UK chancellor Alistair Darling has already released a statement defending his projections put forward in his budget earlier this year, saying that he’s "always been clear that growth will return at the end of the year".  

Prior to the economic data release, the forecast range of economists surveyed…

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Housing market stabilising

As many of you are aware, we have been following the developments in housing markets quite closely, particularly in the UK.  The housing markets were both a signpost and then a symptom that helped to drive inflation lower and brought the banking system close to collapse. For the UK, the chart we have focused on the most is the use of mortgage approvals as a lead indicator for the strength of th…

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Gordon Brown – a bit less keen on an independent Bank of England

At a time when the gilt market is desperately interested in the future of Quantitative Easing, the Prime Minister yesterday sent a shot across the bows of the Bank of England’s MPC by saying that ending QE would put the UK into a “very deep recession”.  Whilst his words were, on the face of it, aimed at the Conservative Party’s perceived reputation as Great Depression puritans who would remove …

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Baltic Dry Index suggests weakness ahead for government bonds

The Baltic Dry Index is a measure of the price of shipping dry goods such as coal, iron ore or grain, and is commonly used as an indicator of global demand.  The beauty of this index is that unlike financial markets, it’s not subject to speculation. We’ve mentioned the Baltic Dry Index once before on this blog, when Jim highlighted at the beginning of September 2008 that continued new lows in t…

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The Bond Vigilantes visit China and Hong Kong

Richard Woolnough and I were in Asia last week to try to get a view on a couple of the big macro questions of the day – firstly, is China still an exporter of deflation to the global economy, and secondly, will the region continue to finance the West’s exploding budget deficits?  We also wanted to get a feel for Asian credit opportunities, and to understand how the region’s banks managed to get…

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Long dated UK inflation-linked gilts – possibly the most expensive bonds in the world

The new issue of an inflation-linked gilt maturing in 2050 a couple of weeks ago reminded me of an excellent three page paper that Larry Summers wrote in the mid 1980s (see here). In short, Summers invented what he called ‘ketchup economics’ and had a bit of a dig at economists working in the world of finance.  Financial economists ‘work only using hard data and are concerned with the interrela…

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An Alternative View on the World

Practically every newspaper article or research note I have read on the global economy over the past couple of years hasn’t failed to mention the huge pool of potential demand for goods and services that lies in the emerging middle classes of  China and India. I think this map gives us some sense of perspective when reading the huge numbers the journalists and analysts have been talking about. …

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