The VP Blog
A blog about financial markets and the VP investing framework
European Recovery: Periphery Loan-growth Needed
One of the aims of loose monetary policy is to boost lending. The theory is lower rates and greater availability of liquidity will encourage lending and borrowing, which in turn will boost economic activity. Unfortunately, an increased supply of loans does not...
Earnings to Fall Further
Profit margins are declining, and we expect them to fall much further. As you can see from the chart below, Variant Perception’s leading indicator for wages does a very good job of leading US corporate profit margins by a little over a year and a half. The message is...
Aussie Housing Finance Rolling Over
We are already seeing cracks in the housing market in Australia. At Variant Perception we track news articles of things in oversupply, as this flags interesting investment themes. Normally, we’ve seen commodities in oversupply, but interestingly, Australian...
Commercial and Industrial Lending to Fall
You can take a horse to water, but you can’t make it drink. This is generally the mistake made by many when it comes to credit. If you expand the availability of credit, and make it more attractive, then more people will want credit. But this is rarely the case. ...
Financial Conditions Keep Tightening
Financial conditions are slowly but surely tightening. We have had one actual rate hike by the Fed, but conditions had begun to tighten before this. This is primarily a developed market phenomenon. Real M1 for the G7 has been trending down for the past 6 months....
Inflation Alive and Well in the US
We have focused on the theme of the misplaced fear of deflation at Variant Perception frequently over the past 18 months. At several points, markets and commentators seem to have become preoccupied with a belief that growth-destroying deflation was imminent. Using...
Excerpt from VP Tactical Report 9th Feb 2016: Sell EURSEK Rallies
From our Tactical Report of 9th Feb 2016: We like selling EURSEK to play the weak euro theme as the market looks towards the ECB meeting in March. Sweden’s economy is in the midst of a cyclical upturn and leading indicators remain at high levels (top chart). Rate...
The Market and the Economy
We discussed earlier last month how investors should not confuse the market and the economy. The market might be volatile and suffering losses at the moment, but the US economy is still ambling along. Manufacturing is likely in a recession, but the service sector is...
Gold Miners Very Cheap to Gold
From our Tactical Report of 19th Jan 2016: Gold miners continue to cheapen to the gold price. Using the Philadelphia Gold and Silver Index (which has the longest history), precious-metal miners are now as cheap as they have ever been to the gold price. While many...
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