The VP Blog
A blog about financial markets and the VP investing framework
Eurozone Deposits Growing Again
The ECB’s loan demand surveys (which lead by about 12 months) have been suggesting higher credit growth ahead for some time (top chart) and there are signs that this may finally be occurring. The bottom chart shows that overall eurozone deposits rose in November,...
read moreEmerging Market Valuations Will be Compelling
A weak oil price and a strong dollar rally will put pressure on emerging markets, but valuations for many emerging markets should soon be compelling. Emerging markets have been in a downtrend relative to the S&P since 2010. We will likely see further weakness ahead...
read moreTop Ten Posts of 2014
As we head in to 2015, here are the top ten posts from 2014. We wish our readers a Happy New Year! Top 10 Posts of 2014: Profit Margins To Head Lower, Equities To Suffer (May 22nd) Deflation Not A Danger - Modest Inflation With With Wage Growth Ahead (June 9th)...
read moreJapanese Equity Flows Diverge
October saw the BoJ’s announcement of increased stimulus, coordinated with the new targets for the GPIF, 25% each for foreign and domestic equities (up from 12% each), and a decrease in JGBs, from 60% to 35% of holdings. Investors, both Japanese and foreign, have...
read moreUK Credit and Money Growth at Extremes
Easy monetary policy in the UK is looking ever more inappropriate. Divisia money is a weighted money-supply measure. Higher forms of money, eg notes and coins have greater weights than less liquid forms of money, such as building society deposits. Thus Divisia...
read moreHigher Rents in the US are a Strong Support for CPI
Despite the subdued nature of US CPI, some large components are turning up. Owners’ equivalent rent and rent of primary residence, which together account almost of a third of the CPI basket, are turning up strongly. A low vacancy rate and a relatively resilient US...
read moreBOJ Putting Pressure on Other Asian Central Banks
Further yen weakness, in an environment of slowing global growth, will put pressure on other central banks to ease policy. Although attention is rightly focused on the ECB, Japan’s biggest trade partners, who derive significant parts of GDP from trade with Japan, are...
read moreSwiss Gold Referendum: A Spanner in the Works
As polls continue to swing around ahead of the Swiss gold referendum on 30th November, we expect increased volatility in the FX and gold market. After the implementation of the EURCHF floor, gold’s share of the SNB balance sheet has fallen to 7.5% from around 30% in...
read moreP/Es Waning As A Source of US Equity Returns
After some very strong years, multiple expansion in the S&P is struggling to contribute to returns in the index. So far this year, P/E multiple expansion has only contributed 32% to S&P returns (top chart). More reliance is being placed on top-line growth to deliver...
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