What will end the search for yield?


The insatiable appetite for yield has prompted investors to take on ever more exposure to the highest yielding areas of the bond market. The search for yield appears unstoppable.Global investors’ voracious appetite for income has been a near-constant theme since the end of the financial crisis, propelling bond yields to… Read More »

Value Update: Where Is the Next Pocket of Opportunity?


Over the last 18 months we’ve seen the beginning of a rally in value stocks, which have rebounded from 2015’s 20-year lows. In 2016, value stocks outperformed growth stocks by the widest margin in well over a decade. Now, with the value rally underway, the question we’ve posed to ourselves… Read More »

M&G Investments Comments on China Bond Connect


The China – Hong Kong bond connect is another gradual step that China is taking in opening up its domestic bond market for foreign investors. Bond connect will have some operational advantages versus investing directly onshore in the sense that it will not require the investor to have a local… Read More »

Three ways to higher yields


Bond investors need better valuations and more differentiation in risk premiums to make the asset class attractive again. With yields close to their all-time lows, we are all aware of the risk of losing money at some point in fixed income. The combination of looser fiscal policies to meet the… Read More »

UK earnings forecasts unchanged despite headwinds


Developments in the UK have led us to renew our focus on the region in recent weeks, amidst the start of Brexit negotiations and the general election. We have not made any changes to our neutral position on UK equities and UK rates, or our negative view on sterling. We… Read More »

Intesa Sanpaolo: additional thoughts on the BPVI-VB deal


A good bank for ISP: ISP is set to take over the “good” bank stemming from the segregation of some assets of BPVicenza (BPVI) and Veneto Banca (VB) at €1. We estimate that the scope acquired is ~€42.4bn total assets (€28bn RWA) including €4bn “high risk” performing loans which could… Read More »

Treasury yields suggest the US economy is approaching a peak


Current low term premium for US Treasury bonds suggests US economic growth is near peak The yield curve and term premium estimates are useful for the forecasting of future returns from bonds. In addition, identifying the macro drivers of bond returns helps to detect trend reversals in the economic cycle… Read More »

Buy European banks on Italy news


Reasons to buy European banks stocks continue to mount. We are seeing heavy demand for single names as news that a deal has been negotiated to wind up two failed Italian lenders. Under the agreement, Italy’s largest retail bank Intesa Sanpaolo will acquire the remaining performing assets of collapsed Popolare… Read More »

Good deal for Intesa-Sanpaolo, happy end for Italian banks


Yesterday, the Italian government approved the emergency rules for BPVicenza (BPVI) and Veneto Banca (VB). The Decree provides for total €17bn amount of resources potentially mobilized to liquidate the lenders. Burden sharing and state aid The government tried for months to rescue the two banks, but the effort ended on… Read More »

Corporate Profits Flirting With Recovery

Laurence Taylor -

Despite great expectations of economic recovery over the past few years, corporate earnings growth has been in relatively short supply. Having rebounded strongly after the financial crisis, global earnings per share (EPS) improvement trends have been muted or poor since 2011. As equity markets and equity valuations have been spurred… Read More »