Financial Stress, Valuations, and Realignment Risks: Is Uncertainty Looming?
The external debt of developing economies has more than tripled in the last ten years. Brazil of all countries is selling notes to yield-hungry investors that mature in 2047! Where is the rationale to buy 2047 notes in a country whose current deficit exceeds 10% of...
Weekly Market Update
Market Action Stocks fell for the second consecutive week although markets remain quiet overall. Treasuries have been in their tightest trading range in years, the VIX sits far below its long-term average of 20 and equities haven’t moved more than 1% since early July....
Weekly Market Update
Market Action U.S. stocks retreated slightly from their all time highs this week. Minutes from the Fed’s latest meeting revealed a divided committee while commentary from regional Presidents this week put the potential of a rate hike in focus. Futures markets still...
Reconciling Market Signals
In last week’s commentary we pointed out that the accumulation of debt by corporations may be behind the market upswing (through shares buyback programs while the fundamentals do not support such uptrend). The fact that yields on sovereign and corporate bonds have...
Credit Markets and the Financial Bloodline: The Oxymoron of an Upswing
Corporate debt is at record high. Net equity issuance has been negative for the last few years. The shares buyback pattern is simply staggering. The fact that almost 70% of corporate earnings are paid out in the form of corporate buybacks and dividends is antithetical...
Dancing Around the Banquet of Stagnation: Seeking Market Catalysts
The extraordinary global increase in the debt-to-GDP ratio requires a growth rate of at least 4% in order for the debt to be sustainable. The unfortunate thing is that such growth rate looks unrealistic given today’s economic fundamentals. Moreover, the earnings...
Monthly Barometer’s Forward-Looking Monthly Review: An Interdisciplinary View of our Complex Global Economy
July 2016 The “risky trinity” (in the words of the BIS) of (1) unusually low productivity growth, (2) historically high global debt levels and (3) remarkably narrow room for policy manoeuver explains why ultra-low interest rates, a symptom of apprehension about...
Weekly Market Update
Market Action Another week of positive performance for U.S. equities comes in the midst of earnings season. So far, corporate profits have come in stronger than analyst expectations but still seem to be on track for the sixth consecutive decline. Of relief to market...
From the 1956 Suez Canal Crisis to the Turkey’s 2016 Failed Coup: Geopolitics and a Series of Dreams
Somewhere in the middle of the Pacific last weekend over dinner with Bob Zimmerman the lyrics of his song “A Series of Dreams” echoed in my ears. The attempted coup in Turkey was falling apart in the midst of geopolitical uncertainties from Asia (and the pertinent...
Weekly Market Update
Market Action US equities followed up on last week’s highs by resoundingly breaking out of their range bound trading zone of the past couple of years to set brand new peaks. Financials led the rally thanks to interest rates bouncing sharply off their all-time lows as...
