Monthly Archives:

October 2011

The eurozone debt crisis explained

Yesterday, Stefan and Mike gave a teleconference discussing our views on the eurozone debt crisis. They cover some very interesting issues, such as the relationship between current account deficits and sovereign defaults/crises, the ECB’s ‘underwhelming’ response to the current crisis and the implications for the financial sector of the strong link between sovereigns and banks, as well as what …

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European High Yield – Crossing the Value Rubicon

As we’ve stated earlier this year, we think the European high yield market is presenting us with some very interesting opportunities. As of 6th October, one of the high yield indices that we track had an average yield to maturity of 12.0%. This equates to a risk premium above and beyond government bonds of around 10.4%, a level that we believe more than compensates investors for expected defaul…

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B(l)ank cheques

Rating agency Moody’s today downgraded a swathe of UK banks. The reasoning behind this was not the weakening of the economy, nor the fact that, according to Mervyn King, we are in possibly the worst financial crisis ever. It was due to the changing nature of the blank cheque that banks receive from their implicit support from the state.

The rating agencies have recognised that government policy…

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The M&G Inflation Conference

On Tuesday we hosted a conference to discuss the longer term outlook for inflation. Our guest speakers were Adam Fergusson, the author of the brilliant book “When Money Dies” about the Weimar Germany hyper-inflation, Andrew Sentance, the famously hawkish former MPC member, and Ken Mulkearn, the editor of the Income Data Services Pay Report. Our very own Ben Lord also gave an update on developme…

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