The VP Research Blog

A blog about financial markets and the VP investing framework

Stay Cautious on UK Stocks

UK equity valuations are among the lowest in DM, but caution is still warranted. We wait for an upturn in our LEI before considering longs in UK domestic stocks UK-specific risks subsided sharply following the conclusion of a bilateral trade deal with the EU at the...

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Brazilian Real Pressures Starting to Ease

A rebound in economic activity and near-term stabilisation in the fiscal accounts has alleviated pressure on the Brazilian real Although the economic outlook in Brazil remains shrouded in uncertainty as the Covid pandemic continues to rage, pressures on the currency...

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Market Senses Rising Inflation Risks

Inflation remains one of the few areas where there is not an overwhelming market consensus. We see rising inflation risks The market is running out of non-consensus narratives, now that we can see the vaccine being rolled out and the potential for a strong economic...

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European Property Surge Set to Continue

Aggressive monetary expansion and a slowdown in construction activity have underpinned surging property prices. Both dynamics will keep fuelling the rally In the decade following the global financial crisis, unprecedented low funding costs and the search for yield...

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Sweep Elections and Sector Mean Reversion

The best performing sectors before sweep elections tend to underperform afterwards, and vice versa We dig through the historical data on previous sweep elections and come to two conclusions: 1) sweep elections do mark changes in relative sector performance; and 2) the...

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Comparing Today’s Markets with 2009 and 2017

The remarkable resilience of equity markets this year, along with the general bullish consensus for 2021, has some parallels with previous price action in 2009 and 2017 In 2009, equity markets rallied against a backdrop of a terrible economy, but rising leading...

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It’s the Most Wonder-bull Time of the Year

Reflation narratives are becoming consensus, but there is little reason to be contrarian for contrarian’s sake Strategists are flooding client inboxes with year-ahead forecasts and themes, and it’s striking how similar the arguments are. The common conclusion from...

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Hidden Risks from ECB’s Pandemic Tools

The ECB’s policy response to the Covid crisis has been game changing, but has also added to the list of risks that undermine financial stability. The disruption to wholesale bank funding is a case in point In the midst of an unprecedented economic contraction, it is...

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