Tag Archives: Investment review

The CIO office’s view of the week ahead.US equities declined roughly 7% over six days up to last Thursday. While the decline is in line with the median drawdown level since 2007, it was notable for its length, given the average drawdowns over the same time period lasted 40 days, rather than six. Most likely, investors were reacting to the higher risk environment created by rising bond yields. However, compared with February’s sell-off, there is less exuberance on the technical side....

The CIO office’s view of the week ahead.Far-right presidential candidate Jair Bolsonaro claimed victory in the first round of Brazil’s elections on Sunday, albeit he did not obtain the over 50% of the vote required to secure a majority and avoid a run-off. Markets have grown more positive toward Bolsonaro since the start of his campaign and we think Paulo Guedes, is a reassuring choice as his economic advisor. University of Chicago-educated and former banker Guedes has liberal economic...

The CIO office’s view of the week ahead.The Italian government’s budget deficit target of 2.4% for each of the next three years. It could have been worse: at one stage, the populist coalition’s spending plans looked like raising the deficit to 6%. But its actions set the stage for a clash with Brussels, while Italy’s credit rating could be downgraded in the coming weeks. For some time we have been underweight Italian bonds (as well as euro area peripheral bonds in general), a decision that...

The CIO office’s view of the week ahead.Today’s kicking in of US tariffs on an extra USD200bn of Chinese imports, and China’s retaliation, marks a notable escalation in the trade war between the two countries. But markets prefer to look at the robust US economy, with strong M&A activity also helping (of which Comcast’s winning bid for Sky is just the latest manifestation). Markets seem to be betting that trade tensions will eventually cool. There is indeed a possibility that trade...

The CIO office’s view of the week ahead.September 15 marked the 10th anniversary of Lehman Brothers’ filing for Chapter 11 bankruptcy protection. Since Lehman’s collapse has come to symbolise a massive financial crisis whose consequences continue to be felt, it is natural for this anniversary to be the occasion for speculation on when and where the next large-scale crisis might occur.Emerging markets (EM) are the weakest link in the eyes of some, even though contagion has been limited to the...

The CIO office’s view of the week ahead.Politics and related events around the world continued to dominate headlines, distracting markets. In the US, clarity around the next tranche of tariffs on USD 200bn worth of Chinese imports failed to materialise as the Trump administration became preoccupied by a White House insider’s New York Times op-ed, which coincided with the imminent release of the latest tell-all book by journalist Bob Woodward. Meanwhile, in the run-up to Brazil’s potentially...

The CIO office’s view of the week ahead.Last week, the US concluded a trade ‘deal’ with Mexico, although the extent of changes is limited, mostly targeting the car industry. While this is a step in the right direction, the picture is not clear-cut and could ultimately be a story of several deals. Meanwhile, this week we expect Trump’s confirmation regarding the potential for further tariffs on USD 200bn of Chinese imports, fuelling uncertainty around global trade. China’s economy is already...

The CIO office’s view of the week ahead.Jerome Powell’s speech at the Jackson Hole summit of central bankers on Friday helped support emerging markets (EM) after a nervous few weeks, especially in Turkey. While the Fed chairman reiterated plans for the gradual normalisation of monetary policy, he also said that the economy is not at risk of overheating, meaning the Fed is unlikely to accelerate rate rises. This, in combination with Trump’s vocal aversion to a strong dollar (he said last week...

The CIO office’s view of the week ahead.Last week market volatility was driven by news headlines, rather than fundamentals. This was particularly evident in emerging markets (EM), which continued to underperform despite the stabilisation of the Turkish lira. Chinese internet company Tencent piqued investor nervousness after reporting disappointing Q2 results, against a broader backdrop of concern around slowing Chinese economic growth and technology stocks’ growth prospects. While the...

The CIO office’s view of the week ahead.Last week, markets were troubled by the dramatic decline of the Turkish lira and the potential for the spread of contagion elsewhere in markets. The lira fell by 12% on Friday and 35% since the start of 2018 against the dollar. Emerging Market (EM) equities fell but overall losses for the week were limited. Elsewhere, the European Central Bank voiced its concern over EU banks’ exposure to Turkish borrowers, sending European banks’ shares and the euro...