The VP Research Blog
A blog about financial markets and the VP investing framework
Fed Easing sees Defensive Stocks come out on Top
Over the last five Fed easing cycles consumer staples, healthcare and energy provide the highest average total return above the index one year after the Fed’s first cut. This is not too surprising given that the Fed started cutting as recessions loomed in 2007 and...
Time to Take Profits on UK Miners
UK miners have performed well over the last year, returning 13.4% against the FTSE-All Share’s meagre return of 1.5%. Accelerating iron ore prices this year has driven this outperformance and the top chart illustrates that this relationship holds over long periods. In...
Silver to Continue to Outperform Gold
Low real interest rates and geopolitical uncertainty have helped fuel gold to being the best performing currency this year, returning over 10% against the USD. While we think gold remains a good investment in the current environment, we re-iterate our idea from our...
Consider Sovereign Default Protection
The abrupt shift in G10 monetary policy expectations has not only triggered a substantial repricing of long-end rates, but it has also underpinned a reduction in credit risk-premiums. This is particularly evident for emerging-market sovereign issuers where the cost of...
Early Signs of Greek Rebound
Another new era dawns for Greece after voters rejected the incumbent hard left Syrzia government at the July 7 general election and voted in the centre-right New Democracy. The economy also, finally, appears to be turning a corner. The Greek treasury tapped a 10-year...
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...
Norges 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...
Market 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...
Negative-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,...
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