The VP Research Blog

A blog about financial markets and the VP investing framework

Support for Gold rally is building

Gold has been in a narrow range since mid-August, and is down about 6% YTD in USD terms. It has had several opportunities to sell off more given a hawkish Fed, a rising USD and speculators going net short, but tellingly it has remained quite well supported. Today...

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Locals see Opportunity in LATAM

We have previously highlighted that despite the global equity selloff there has been only a marginal decline in flows to emerging market equity ETFs, which suggests that investors remain committed for the time being. We have dug further into fund flows for Brazil and...

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Swedish Housing Market Starting to Crumble

We have previously flagged Swedish property as both a precariously overvalued asset and a risk to systemic stability given the high degree of household leverage. The scale and intensity of the Swedish property bubble is reflected in the two charts below. In real terms...

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The Italian Doom Loop

With Rome appearing to square off with Brussels over its contentious budget, BTPs have faced considerable pressure and bank stocks have been hammered. This is the nefarious doom loop: Italian banks own a large chunk of Italian government debt and, given the lack of...

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Dollar Funding Shortage set to Continue

The widening of the cross-currency basis (JPY, EUR and GBP, in particular) against the US dollar provides further evidence of a structural dollar-funding shortage, which is set to worsen as the Fed tightens. Although the spread typically widens towards year end, the...

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Australian Housing showing further weakness

Since 2016, our structurally bearish thesis on Australian housing has taken a while to play out as cyclical data often managed to hold up as the RBA kept policy loose and as the global economy was awash with liquidity. Now, however, as global-liquidity headwinds are...

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Foreigners’ Confidence in UK Remains

The politics of Brexit have enveloped the UK, and have negatively affected UK growth. However, as recent current-account data shows, things are less bad than originally feared. The top-left chart shows that net investment into the UK has continued to rise. The total...

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SNB may soon come under pressure

We have previously argued that the Swiss National Bank has become slightly more tolerant of modest currency strength, given that the sheer scale of previous FX intervention has dented the central bank’s appetite for further balance sheet expansion. The top-left chart,...

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