12 Years of VP vs Noise
Sharing the ideas and experiences that have influenced our work
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...
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...
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...
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...
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...
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...
Engines of Global Growth Keep Recovery on Track
Excerpt from November 10th: The US and China are the current engines of growth, keeping the global recovery on track. A vaccine only reinforces the recoveries in China/US, and should eventually put Europe back on a stronger footing The three main engines of global...
ECB May End up Absorbing all Government Supply in 2021
The ECB has provided a clear indication that additional stimulus will come in December. A further expansion of PEPP could result in the ECB purchasing most, if not all, of the EGB supply in 2021 Although the ECB left the monetary stance unchanged at their last...
Steeper and Cheaper
While further gains will be harder from here, indicators continue to point to a supportive backdrop for yields and the yield curve, with the latter historically tending to steepen through US elections In our October monthly report (The Case for Banks - October 8th...