The VP Blog
A blog about financial markets and the VP investing framework
TLTROs are no Silver Bullet to Eurozone Problems
The ECB’s latest announced form of stimulus is a third round of TLTRO issuance. Previous tranches of TLTROs have been 4-year loans primarily made to European banks that are active in lending to the private sector. The rate paid on the loans is reduced as more of the...
read moreHints of Eurozone Reintegration
The reduction in cross-border financial asset holdings and regional trade across the eurozone are perhaps the most visible scars left from the global financial crisis and subsequent fallout in European sovereign debt markets. Under pressure from national regulators to...
read moreUse Risk Rally to buy Default Protection
This post was taken from our March 5th weekly report. In line with rebounding equity markets following the 4Q18 correction, credit risk-premia have compressed sharply. This is particularly notable for the big political risk plays of 2018. UK CDS spreads have narrowed...
read moreDeath by Extrapolation
Extrapolation has killed more people, companies and portfolios than almost anything else we can think of. You assume that you’ll continue to be healthy until you get that cancer diagnosis or fall to the floor from a heart attack. You assume profits will continue to...
read moreOutsize demand for risky Italian bonds
Going by the strength of demand at recent Italian sovereign bond auctions, it would be easy to forget that the government was recently locked in an acrimonious dispute with Brussels over its budget deficit target for 2019. Now that the budget fiasco has died down,...
read moreEurozone deflation risk remains
Market momentum is building behind the global growth slowdown narrative, with last week’s downbeat European Commission forecast report triggering a safe-haven bid. The eurozone, in particular, is caught in the crosshairs with the German and Italian economies buckling...
read moreAUSTRALIA’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...
read moreThings 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...
read moreRoom 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...
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