12 Years of VP vs Noise
Sharing the ideas and experiences that have influenced our work
Bank of England Mood Changes
This post is taken from our April 24th weekly report. Much like the Federal Reserve, the Bank of England has been itching to normalise monetary policy following nearly a decade of providing emergency assistance to the economy. Buoyed by the run up in prices over the...
What’s with the Name Variant Perception?
Variant perception is the effort to become sufficiently knowledgeable about whatever the subject is, that at a time to be at variance from consensus, because one of the few sure ways to make money in the market is to have a view that is off consensus and have that...
Czech koruna: Pausing for Breath
Since we highlighted the potential of CE3 markets in July 2017 in light of the global reflation trend, our preferred trade – short EURCZK – has made a modest 2.8%. Even after this relatively anaemic rally, we believe that the koruna will now take a breather. As a...
Tactical Long in MLPs for April
This post is taken from our weekly report dated April 3rd 2018. In our November 28th 2017 Weekly report, we recommended short-term long MLP positions into year-end on bearish sentiment and fundamental divergence of the MLP index vs crude oil prices. This worked well...
Worth Revisiting UK Equities
The tectonic political shocks of the last two years have left UK equities feeling unloved. In US dollar terms, UK equities have returned -5% year-to-date, underperforming the majority of developed and major emerging markets (top-left chart). This is despite the...
The UK’s Deleveraging Failure
The synchronised nature of the global economic recovery has fanned speculation that the post-crisis deleveraging in developed countries has finally come to an end. However, we err on the side of caution and cite evidence from the UK, which suggests there has been...
Headwinds for US Manufacturing
The US manufacturing ISM is currently at levels last seen before the 2008-09 recession. While this reflects the recent optimism about growth prospects in the US, we see several headwinds to the industrial sector. The top-left chart shows the ISM against the VP...
Fade Bank of Canada Rate Hikes
This post is taken from our March 13th weekly report. In our February Monthly we suggested selling CAD, and buying Bankers’ Acceptances (BAs), the Canadian analogue of Eurodollar futures. With ~64bps of rate rises priced in from the Bank of Canada over the next year,...
Global Trade and the Dollar
This post is taken from our March 6th weekly report. Once again, trade wars are a potential risk, with Donald Trump threatening to impose tariffs on steel and aluminium imports, and other countries responding that they may impose retaliatory taxes on US goods. The...