The VP Research Blog
A blog about financial markets and the VP investing framework
Reflation Sensation
Bloomberg and Google news trends show reflation headlines are everywhere. Widespread coverage is typically a sign that trends are starting to exhaust and that markets are due for a period of consolidation, before the next leg higher Our growth and liquidity LEIs...
Tracking the US’s Labour Market Recovery
The US labour market has pockets of tightness. However, it’s unlikely we’ll see rapidly rising household inflation-expectations until we see higher low-skilled wage growth and rising ex-transfer incomes Our indicators show that at this relatively early stage in the...
Crisis Management – Buying in a Bear Market
In the depths of the pandemic and market volatility in April 2020, we released a report for clients recommending screens of stocks that we thought would outperform even if the market had not continued rallying off the March lows. One year on, we review our...
Adding Back Central Bank Ambiguity
Central banks are adding more ambiguity back into their reaction functions. This points to higher global rate volatility After years of repression, rate volatility is beginning to rise. This is not only a reflection of greater macro-economic volatility, but -...
Too Early for a New Dawn in the UK
The UK’s successful vaccination programme has fuelled speculation of a rapid recovery. However, barriers to post- Brexit trade and a slow easing of lockdown restrictions pose serious risks. It is premature to suggest UK underperfomance is over After a wobbly start to...
Equities and Yield Regimes
We look at the performance of equities and intermarket relationships across different real yield and inflation breakeven regimes. Today, real yields are starting to drive changes in nominal yields, which is supportive for equity gains In a recent report for clients,...
Sustained Eurozone Bond Sell-off Would Raise Chance of Yield Curve Control
Rising bond yields and tightening financial conditions pose a risk to the economic recovery and, in the euro-area, could increase the probability of the ECB formally adopting YCC The recent sharp sell-off and bear steepening in global sovereign debt markets has stoked...
Food Inflation Tailrisks
Food prices are correlated with EM inflation surprises. The current surge in soft grain prices should be monitored in case it spills over into general inflation expectations Food inflation can have outsized impacts on inflation expectations due to the higher frequency...
The Next Commodity Supercycle
There are three big drivers of the commodity supercycle: (1) The long era of monetary-policy dominance is over, leading to a heightening of inflation risks not seen since the 1960s, (2) Investors are deeply underweight and will need real assets such as commodities as a hedge against inflation, (3) Commodities are generationally cheap, both compared to themselves and to other assets
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