The VP Research Blog
A blog about financial markets and the VP investing framework
Variant Perception’s Claus Vistesen was on BBC World Business this week talking about the eurozone periphery and how governments will be given more time to adjust their budget deficits.
May 30 (Bloomberg) -- Jonathan Tepper, chief executive officer at research firm Variant Perception, talks about asset bubbles, the Spanish economy and monetary policy. He speaks with Mark Barton and Anna Edwards on Bloomberg Television's "Countdown." (Source: Bloomberg)
Last week’s BoJ meeting did not meet expectations of trying to soothe the Japanese bond market. Yields have shot up, with 10y yields 50% higher in May as of this morning, largely a consequence of the BoJ succeeding in raising inflation expectations. However, of more...
The developed world remains mired in the debt crisis that roiled the global economy in 2008. Growth is low, and deleveraging is an ongoing process. However, the response by policymakers has been strong, and free money is leading to bubbles, the misallocation of capital and excess leverage. In this note, we lay out a framework and road map for investors to look at the rise and inevitable bursting of the bubble in global corporate bonds. The Fed and the rest of the G4 central banks have created a bubble in the corporate bond market.
Volatility in general is still falling, with both equity and commodity volatility lower than their 2005/06 trough. However, we are seeing signs of life in interest rate volatility. US rate volatility has recently pipped up, and this has been led by a sharp increase...
Employment in the US is closely watched, especially as the Fed has marked it out as an important factor in how it will judge its stance in monetary policy. Payrolls have improved and the unemployment rate has declined, but structural issues stubbornly remain. The Fed will be alert to these issues, and thus the bar for the removal of stimulus is very high, despite repeated murmurings of ‘tapering’ and a tightening in monetary conditions.
In the short run, it is difficult to see what can stop equities at this point. Low inflation, central bank support and relatively robust economic data have created a Goldilocks scenario for equities. However, perhaps as a result it is worthwhile looking at what could go wrong. One of the more important intermediate indicators on the equity market is derived from the stock of US margin debt at the NYSE.
Follow this link to watch from the beginning of the interview, or skip to minute 34 on the video below.
The spotlight remained on Portugal the end of last week as EU finance ministers agreed to give the country seven more years to repay its stock of existing loans. Still, despite the words of praise showered on the country the deficit containment record has been a pretty checkered one. The deficit target for 2013 is 5.5% of GDP will not come under the EU 3% level until 2015 at the earliest.