News

The ‘real regime’ during the equity correction

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■     Since the start of the year, a combination of hawkish monetary policy, the war in Ukraine and the risks from China zero-COVID policies have dragged markets in a ‘Balanced Bear’, with equities selling off alongside bonds. ■     With a worsening growth/inflation mix, inflation expectations have decorrelated from growth pricing,… Read More »


European banks: strong profits, capital buffers protect creditors from softening macro outlook

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At times of great uncertainty, it is useful to step back from the ambitious and often near-impossible goal of forecasting financial impacts with precision, and to focus instead on the availability of buffers for risk protection. In this report, we offer a simple, transparent framework for assessing the vulnerability of… Read More »



The Economics of Algorithmic Stablecoins

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■     In addition to the major drop in cryptocurrency prices, digital asset markets have recently been dominated by volatility in stablecoins—cryptocurrencies intended to be pegged 1:1 with fiat currencies, most commonly the US Dollar. Within the last few weeks, two prominent “algorithmic” stablecoins have de-pegged (“broke the buck”), Terra USD… Read More »


Why we still prefer stocks over bonds

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·We recently cut risk, but stick with stocks over bonds for now. Equity prices now reflect much of the worsening macro outlook and hawkish Fed, in our view. ·Markets came to grips last week with the trade-off central banks face: choke off growth or live with inflation. Yields fell and… Read More »


European Daily: BoE — How Different from the Fed?

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■     The Bank of England’s cautious messaging at last week’s MPC meeting contrasts sharply with the Fed, which accelerated its tightening pace to 50bp increments. Given the many similarities between the UK and US economies, we explore whether the BoE’s macro backdrop is sufficiently different from the US to justify… Read More »


Aero Titans Boeing and Airbus: Who Will Seize the Day?

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The venerable 105-year-old Boeing Company has been locked in competition with 21-year-old Airbus SE, which was born from the culmination of various historic European aircraft manufacturers who consolidated after the Second World War and with about 25% of its stock held by the governments of France, Germany and Spain. The… Read More »



A rebalancing act to reduce risk

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•    We slightly reduce risk on a worsening macro outlook. We upgrade European government bonds and investment grade credit, and downgrade Chinese assets. •    The Fed raised rates by 0.5% last week – the largest increase since 2000 – and signaled similar rises ahead. Long-term yields shot up and stocks… Read More »


The Risk of Second-Round Effects

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The surge in Euro area inflation—with headline expected to reach 9% in September—has raised the prospect of second-round effects, where increases in wage growth and long-run inflation expectations push up inflation persistently. We explore the risk of such effects by taking a historical look at the effects of oil price… Read More »