04 Décembre 2017

What will next year look like? We would all like to know and there are good reasons to expect it to be even better. Also, it probably will get a bit bumpier from a markets perspective, but that might not even be a bad thing. It needs to be managed, but also will create some opportunity.

Valentijn van Nieuwenhuijzen

20 Novembre 2017

The global economy is stronger than it has ever been over the last decade. Whatever role politicians and policy makers have played and whether they did damage or contributed positively will be debated for years to come. Rather than discussing our stance on this topic, it is important to realize that the strength of the economy is broadly acknowledged.

07 Novembre 2017

The complex nature of financial markets creates a need to develop ways of observing its behaviour, in order to better understand the market and its interaction with the socio-economic environment. When economics and politics diverge, it becomes even more important to understand the behavioural forces that can shape the market direction.

23 Octobre 2017

Yet another disappointing inflation report. Many had been looking forward to last week’s report on US consumer price inflation and hoped to find confirmation that price pressures were finally rebounding. After a soft patch in global inflation trends in the first half of the year, the Summer period brought back some life to inflation dynamics. As economic growth remained healthy and, in recent weeks, also positive surprises on economic data moved upwards again, the reflation-theme revived somewhat in global markets.

09 Octobre 2017

Yet another week full of political turmoil. The drive for independence in Catalonia, hurricane damage in Puerto Rico and raging Brexit debates in the UK all continue to create massive challenges for the governments in charge. In none of these cases it seems that political leadership has been very effective in resolving the tension (to put it mildly). Let’s hope that changes quickly, but let’s also realize that it might not be that important to markets how quickly these matters are calmed down. Markets have learned in recent years to look through the political fog.

25 Septembre 2017

After bolstering markets for most of the second half of last year, the reflation theme had actually dwindled during the first part of this year. Growth was still good and broadened out further, while politics turned for the better (or less worse). However, the resulting tightening in labour markets and rebounding corporate profits did not translate into stronger price pressures or rising wages. And without the “nominal” part of the economy coming back to life, the reflation narrative continued to look a bit crippled in recent months.

11 Septembre 2017

Investors are currently realizing that the levels at which markets trade make it more challenging to deliver attractive investment returns than in recent decades. Cash and savings rates remain extremely low and bond and equity prices have moved up so much that the potential for additional gains is being questioned by many. Also, and not for the first time in the last few years, markets are struggling to find the balance between economic fundamentals, the outlook for policymaking and (geo-)political risks.

28 Août 2017

US domestic politics have been more prominent over the past week, with President Trump again highlighting his shortcomings. The response to the Charlottesville riots, the disbanding of various business councils, the “new” Afghanistan policy and the ongoing dispute around the border wall all reinforce the notion of an administration that is becoming increasingly isolated.

24 Juillet 2017

At the same time ample liquidity provision, brightening growth prospects and a reduction of tail risks have caused many asset prices to trend higher in recent years. This raises questions how much additional price rises can still be expected and makes some people wondering what type of returns can still be expected from global capital markets. If everything is expensive you might at best be able to reduce your investment risk through smart portfolio diversification, but escaping from a low return future would become close to impossible.

17 Juillet 2017

Markets remain in full swing. Bond markets are correcting as a "taper tantrum"-light is disrupting European government bond markets. Other market segments are obviously also impacted by these moves, but the degree of contagion into other asset classes or regions is clearly less dramatic than what was seen at the real taper tantrum of four years ago.

26 Juin 2017

Inflation is everywhere, except in the official consumer price statistics. Since crisis fighting by central banks forced them to cut rates to zero and embark on the unconventional path of QE talk of inflation “risks” has been widespread. Nearly a decade further in time it is clear that the behaviour of central banks has had a substantial influence on asset prices.

12 Juin 2017

Markets have been calm and we have all discussed extensively what to think or how (not) to worry about this. For those looking for a bit more action there is always hope. Since history only rimes and is not reliable in repeating itself exactly, it might well be that new political or policy drama might be successful where Brexit or the US and the French elections have failed.

29 Mai 2017

Again are we remembered this week that the horror of terror is long but beaten. Our thoughts go out to all persons and families impacted by the drama in Manchester. This era of intolerance and aggression is often hard to digest and equally challenging to understand. This holds for most in society, in politics and in markets. Sadly enough these types of shocks have now also become so regular that markets are less shocked by them than a few years ago.

22 Mai 2017

It’s funny how the mind works. First we fear secular stagnation, then we worry about central banks tightening policy. First we fear lack of productivity growth then we worry about job destruction from technological disruption. First we fear political shocks impacting markets then we worry about the lack of volatility in markets.

26 Avril 2017

Market sentiment faded a bit over the week as risky assets lost some ground and bond yields continued to drift lower. Equities, fixed income spread products and commodities all lost some ground. With exception of the latter, however, all asset classes have still a positive year-to-date performance.

10 Avril 2017

Markets surround the economy in an effort to facilitate a smooth flow of capital to those parts of the system that can put it to work most productively. They create better access to capital for those with ideas but without savings and improve incentives to allocate the available pool capital efficiently.

27 Mars 2017

It is hard to keep up. And it is hard to ignore. Politics are far from the only thing of importance for our lives, the economy we work in or the markets that drive our investment returns. And still, our emotional impulses almost force us to follow what happens in the political arena and our mind automatically paints a picture of what this might mean for the future. Those of us who understand well how we think, who appreciate the complexity of the way we take decisions, will aim to mitigate the influence of an emotional response to the latest political newsflash.

13 Mars 2017

Not too much news on the state of global markets. Macro numbers remain strong, politics remain noisy and investor risk taking is building on the back of the equity market rally. Still, no broad-based signs of excessive optimism visible as fears over political shocks lingers.