The VP Blog
A blog about financial markets and the VP investing framework
Active management most effective in India
Our leading indicators for India continue to fly high, providing a useful lead for Indian equity performance so far this year. Following Modi’s convincing re-election we expect to see a continuation of structural reforms that enhance the productive capacity of India’s...
read moreNorges Bank running out of tightening room
At a time when market expectations of G10 monetary policy are rapidly shifting in the direction of fresh policy easing, Norway is a clear outlier. The Norges Bank hiked the deposit rate by 25bps last week and has alluded to the possibility of further hikes going...
read moreMarket Pricing Restart of ECB QE
The apparent de-anchoring of market-based inflation expectations has started to rattle the ECB and has raised the spectre of a return to monetary easing, mirroring the abrupt shift in marketimplied policy rate expectations in the US where 65 bps of cuts are now...
read moreNegative-yielding debt suggests overextension
Over the last nine months the outstanding amount of government bonds worldwide with negative yield has increased by $5.4trn to $11.7trn (using the latest daily estimate), homing in on the $12.2trn record set in June 2016. The majority is accounted for by Japan,...
read moreElections 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...
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