EM and China Driving Global Credit Growth

The macro-economic landscape has profoundly changed since the financial crisis. Developed markets deleveraged, and emerging markets became the engine of global credit and money growth. The top-left chart from the BIS shows this very clearly. EMEs (emerging market...

The Remorseless Logic of Capital Outflows from China

China is in the midst of a debt-deflationary bust.  It is an ongoing process that has gathered pace recently.  Capital outflows are a symptom of this, and a weaker yuan is an integral part of the attempted cure.  We expect more of this to come. We wrote back in the...

Buyback Boom Peaked, Debt Hangover Ahead

Over the past four years, companies that have bought back their stock have outperformed the market significantly. Most companies did not finance the buybacks with internal cash flow and borrowed at low rates to buy their own shares. The cost of debt is mispriced, so...

A Primer on the Euro Breakup

At the start of 2012, Variant Perception’s research team wrote a paper on the best way to break up the euro. A lot has happened since this paper was written. However, it still provides a clear, solid analysis of the problems leading up to the current situation....

The Great Releveraging in the US

The headline above is not a mistake; aggregate debt to GDP is now growing again in the US . This is evident if we look at the broadest measure of credit in the US which rose to a new high of $57 trillion USD in the first quarter of 2013. As a share of nominal GDP this...

Eurozone Periphery Still at Risk

Variant Perception has been writing about positive leading indicators in Europe for the past 6 months and, in this light, the recent improvement in the data is coming in as expected. The cyclical recovery in Europe is real and will likely have further to go in the...
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