The VP Blog
A blog about financial markets and the VP investing framework
Elections Should Keep India As Best Asia EM Prospect
Exit polls predict that Modi should return to power in India with another 5-year term. The election was a blot of uncertainty on the landscape but, barring a Modi loss (votes are counted on the 23rd May), it should mean no major deviation from the root-and-branch...
read moreSky-High Corn Price adds to Inflation Pressures
With the US and Chinese trade positions hardening, market sentiment has swung into risk-off mode with oil sliding, equities weak and USTs bid. Moreover, this has further fuelled speculation that the next move at the Fed will be a cut, with the OIS market now pricing...
read moreMaking the Best of the US-China Trade War
With the US-China trade dispute escalating further, we have returned to our previous analysis on export similarity to gauge the potential winners from a prolonged trade war. China’s exports are predominantly low-to-medium tech, which indicates a potentially high...
read moreShort CAD on Structural and Cyclical Risks to Canada
The time to be most concerned with an economy is when cyclical risks align with the structural ones. In Canada there is evidence this is happening. The most overt structural risk in Canada is the huge household debt-to-income ratio, significantly bigger than the US’s,...
read moreFear and Risks of China Selling its USTs Overblown
The spectre of China selling USTs has risen again as trade tensions between the US and China heighten. The basic assumption is that US rates will go sky-high and the USD would plummet. However, there are several reasons to think the net effect would not be so...
read moreDomestic Lira Demand a Sign of Turkish Rebound
Last month we warned that the signals from our EM crisis framework were painting a mixed picture of the Turkish economy, which suggests that investors should stay on the sidelines for now. There has been little improvement since then, with credit default swaps...
read moreDovish Fed Pricing and Rising Gasoline Prices Do Not Agree
This post was taken from our April 16th Weekly. The market is currently pricing in a 65% probability of a 25bp policy rate cut in the US over the next 12 months. However, the Fed may have to throw caution to the wind late this year or early next year as inflationary...
read moreReal-Estate excesses building in UK
Net capital issuance (gross issues less repayments) in the UK has been relatively bumpy since the financial crisis as deleveraging in the financial sector has resulted in prolonged negative net issuance. However, net issuance has turned positive since the beginning of...
read moreSetback to Turkish Recovery
Having appeared to have passed the worst of the economic crisis, Turkey has faced a fresh bout of turbulence in recent weeks. We have revisited our framework for identifying buying opportunities following an EM crisis to gauge Turkey’s position on the recovery path....
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