Monthly Archives:

September 2012

The UK’s current account deficit keeps getting worse. Terrible numbers today – time to reduce sterling exposure?

There were some reasons to be cheerful in today’s UK economic data – second quarter GDP growth wasn’t quite as bad as previously thought (the economy shrank by 0.4% rather than 0.5%), and stripping out the weak construction sector, the economy is growing at a reasonable (if below trend) rate.

But we also had news that the UK’s current account deficit showed a significant deterioration. The gap …

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European High Yield – stay in the game, but don’t bet the ranch.

We mentioned late last year that the high yield market had crossed into cheap territory as credit spreads went over 1,000bps. Historically this has proven to be a relatively robust signal to take a constructive view on the market, and it proved so once again. To use a poker analogy, it was like being dealt a full house – the odds were sufficiently in your favour that, even if you didn’t know ex…

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ECB to ECP (European Centre for Politics)

The ECB is modelled on the idea of an independent central bank, where decisions are made to enforce economic rather than political discipline. Recently however, its role and mandate seem to be changing.

This move by the ECB to become more an arm of the state is typified by Mr Weidmann’s comments recently. He draws comparisons of the recent potential bond buying announcement, with that of aggres…

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Is the Federal Reserve running out of ammo, and if so, what does this mean for financial markets?

Almost every financial asset seems to have gone up – in the last year, you’d have made money if you’d bought US Treasuries, corporate bonds, gold or even Italian equities.  It’s only really emerging market currencies or EM equities that have disappointed.  The concept of portfolio diversification and uncorrelated asset classes seems to have gone out of the window, but who cares when everything&…

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