The VP Blog
A blog about financial markets and our investing framework
China Presents Headwinds to Industrial Commodities
Our macro-driven model of expected industrial commodity returns (the CRB Raw Industrials Index includes non-exchange traded commodities such as burlap, rubber and lead scrap) has turned persistently negative, triggering the regime to shift to bearish from neutral (top...
read moreA Yield Curve Inversion: Will it Happen Before the Next Recession?
Recessions are like death – it’s not a matter of if they will happen, but when. Morbid? Perhaps, but as Steve Jobs put it, “Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life… death is the...
read moreStronger Dollar Leaves EMs Vulnerable
With the rise in the USD, UST yields and LIBOR-OIS, it is key to know where most offshore dollar leverage lies. The top-left chart shows the big picture - worldwide, there is over $14 trillion of USD claims held outside of the US (BIS data). Most of these are...
read moreHarbinger for Polish Slowdown
On the back of signs that Germany and the eurozone are slowing, we highlight the risk of a drawdown in Polish economic growth. Although Poland is ostensibly a domestic demand-driven economy, it is still highly trade dependent (exports + imports are above 100% of GDP)...
read moreUK Rates and GBP hit by Disappointing Data
In our March monthly we recommended positioning for lower UK short-term rates based on our weakening long-leading indicator, and we later recommended taking advantage of GBPUSD seasonality - which has seen cable higher in each of the past 13 Aprils - to sell any...
read moreWhat’s Good for Workers is Bad for Companies
Recent data from the labour market and the National Federation of Independent Business shows that wages will be picking up quickly this year. The NFIB compensation plans is now at the highest point in the last twenty years. Small businesses expect to raise wages, and...
read moreBoE Mood Changes
This post is taken from our April 24th weekly report. Much like the Federal Reserve, the Bank of England has been itching to normalise monetary policy following nearly a decade of providing emergency assistance to the economy. Buoyed by the run up in prices over the...
read moreWhat’s with the Name Variant Perception?
Shakespeare said, “What's in a name? That which we call a rose by any other name would smell as sweet.” While this appears true superficially, studies have shown that words can actually affect our perception of an object. Names matter. So, in this article we’ll...
read moreCZK: Pausing for Breath
Since we highlighted the potential of CE3 markets in July 2017 in light of the global reflation trend, our preferred trade – short EURCZK – has made a modest 2.8%. Even after this relatively anaemic rally, we believe that the koruna will now take a breather. As a...
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