Sun, Sand and Summer Liquidity
So it’s that time of the year, a great opportunity to reflect, relax and rejuvenate as the summer months bring a sense of calm to the markets and we all go on holiday to recharge…err…who am I kidding! As we all know, this is no typical year and no typical summer and as active investors we need to continue to be on our ‘investment toes’ as well as on the beach…
The Kansas tornado
“Toto, I have a feeling we’re not in Kansas anymore.” – L. Frank Baum We’ve recently talked of the inflationary dynamics as we emerge from the pandemic. We’ve also talked about forward looking data and commentary being incredibly instructive as to what is actually being seen on the ground by businesses. Just like Dorothy in […]
Shot induced shortages!
My builder tells me there’s a shortage of cement and timber, the bike shop says there are no bikes and that tyres are now twice the price to source. The Ford salesperson can’t deliver a transit van for a year. There are semiconductor shortages. Is this going to alleviate any time soon?
A Moment in the Sun
Being an analyst covering the banks sector has been a pretty thankless task for most of the last 14 years since the Global Financial Crisis almost destroyed the sector. Light touch regulation in the preceding years had left a bank system with extremely high leverage with little capacity to cope with losses should they arise.
All that glitters is not green
Were there a trend to define capital markets in 2020 (pandemic-induced volatility aside), I’d have classified it as the year ESG went mainstream. Of course, ESG factors have been discussed and debated for some time.
The US is truly exceptional!
You may or may not be familiar with the term US exceptionalism, this is distinct from “American exceptionalism” I might add and only a financial term. In a nutshell it is the concept that US assets look more attractive than those outside of the US, which leads to inflows from the rest of the world i.e. other emerging AND developed markets and subsequently …
When good is bad
With the US dollar the globe’s reserve currency, as US treasury yields rise, the reference rate for borrowing across the planet also goes up. There is obviously a clear link between this “risk-free” rate and the rate at which “risky” entities borrow money, be they companies or other governments (typically emerging markets).
It’s not just bonds that have duration!
As I sit in the office at home, I casually glance at the Nasdaq performance over the last few years and the performance has been startling! In the last five years alone the Nasdaq has more than trebled – significantly outperforming most other indices. The rise has been meteoric and according to some market commentators valuations appear stretched.
An underground revolution: metals, mining and ESG momentum
Mining and ESG in the same sentence? A contradiction, surely! Indeed, S&P rank the metals and mining sector as being the second-largest contributor to greenhouse gas emissions, waste, and pollution, narrowly behind the oil & gas sector.
Where can an investor find high yield from investment grade issuers?
Where can an investor find high yield from investment grade issuers? Sounds unlikely doesn’t it, particularly in a world of quantitative easing where central banks are deliberately keeping yields on nearly all bonds at record low levels…
