The VP Research Blog
A blog about financial markets and the VP investing framework
AUSTRALIA’S HOUSING DATA STILL TERRIBLE ACROSS THE BOARD
The vulnerability of the Australian housing market should be well-known to the market by now, but there is no reason to fight this and be contrarian for contrarian’s sake. The latest housing market data in Australia continues to deteriorate and maintains the very...
Things are looking up for US energy
US energy equities have been the worst performing sector on a trailing 12-month and 6-month basis (top-left chart), with most names falling below their 200-day moving averages. The top-right chart shows that historically whenever less than 5% of the constituents in...
Room for UK Consumer Staples to Catch Up
This post was taken from our January 22nd weekly report. In line with the global rebound, UK equities have regained considerable ground in January following the fourth-quarter sell-off. However, consumer staples have underperformed, creating a sharp divergence with...
Buy the USDCNH Dip
VP’s China leading indicator has shown few signs of rebounding and remains in negative territory, presenting a persistent headwind to the RMB. Historically a negative China LEI has led capital outflow by about 6 months and points to further outflow pressures (top-left...
Trading a Bear Market
This post was taken from our January 8th weekly report. We would characterise US equity indices today as being in a bear market. The official definition is a 20% decline from the recent high, close to close, but what does this mean in practice for investors? (The...
A Brief Bout of Market Optimism
This post was taken from our December 4th weekly report. We wrote last week about the absence of bottoming signals for the S&P. From a price perspective, there was little to suggest a sustainable rally was on the cards, as few of the usual signs of selling...
Money markets show no faith in ECB to hike
This post was taken from our December 4th weekly report. While attention will inevitably be focused on the upcoming ECB monetary policy meeting in December and the expected end to asset purchases, money markets are increasingly pushing back against higher policy...
Markets Repricing for Eurozone Lowflation
Market-based measures of euro area inflation expectations have shifted lower, which could point to a delay in monetary policy normalisation. The first chart below shows the EUR 5Y5Y forward inflation swap, which has dropped sharply in recent weeks. A few years ago,...
Support for Gold rally is building
Gold has been in a narrow range since mid-August, and is down about 6% YTD in USD terms. It has had several opportunities to sell off more given a hawkish Fed, a rising USD and speculators going net short, but tellingly it has remained quite well supported. Today...
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