The VP Blog

A blog about financial markets and our investing framework

US Labour Market Fundamentals Still Poor

Looking beyond cyclical variations, a lingering concern is the structural undercurrents of a continuing falling labour force participation rate and a high long-term unemployment rate. Both paint a rather bleakpicture of the US labour market.

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UK Inflation Set to Start Rising Again

UK inflation has been falling, driven mainly by a fall in consumer demand, and last year’s VAT increase falling out of the year-on-year comparisons. Looking under the bonnet, however, reveals a disconnect between inflation of ‘necessary’ and ‘discretionary’ goods.

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Monetary Contraction Continues in Europe

Simon Ward at Money Moves Markets updates us on the latest monetary aggregates from the eurozone and despite strong global growth in excess liquidity and central bank expansion, money growth remains weak in Europe. Going out of 2011, 6 month nominal M1 growth in the...

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The Slowdown in China Takes a Turn for the Worse

The market has recently taken relief from the decision by China to lower the reserve requirement ratio (RRR) as well as the signal that it will be the first of a series of cuts. The real story however is that the shift comes in response to a sharp slowdown in both domestic and external demand in the first quarter of 2012 and thus it seems that investors may have taken too much comfort in the strong Q4-11 GDP print.

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CNBC – Squawk Box, Guest Host Appearance

Variant Perception’s Jonathan Tepper will be appearing as a Guest Host on Squawk Box Europe, tomorrow (Tuesday 21st February) from 7am – 9am GMT.

[Updated] See our Press page for part of the interview.

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A Primer on the Euro Breakup

Many economists expect catastrophic consequences if any country exits the euro. However, during the past century sixty-nine countries have exited currency areas with little downward economic volatility. The mechanics of currency breakups are complicated but feasible, and historical examples provide a road map for exit.

The real problem in Europe is that EU peripheral countries face severe, unsustainable imbalances in real effective exchange rates and external debt levels that are higher than most previous emerging market crises. Orderly defaults and debt rescheduling coupled with devaluations are inevitable and even desirable. Exiting from the euro and devaluation would …

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