Highlights Rising U.S. bond yields will continue to put downward pressure on global stocks in the near term, but will not trigger an equity bear market until rates reach restrictive territory. We are still at least 12 months away from…
The euro debt crisis was essentially a liquidity crisis which resulted from bond vigilantes running amok. When markets refuse to lend to sovereigns at a fair interest rate, maturing debt has to be refinanced at penalizing rates,…
Highlights Set your overall investment strategy with two 'rules of 4' based on 10-year bond yields: If either the Italian BTP or the sum of the U.S. T-bond, German bund and JGB stays above 4 percent, then sell equities and buy…
Highlights Macro outlook: Global growth will continue to decelerate into early next year on the back of brewing EM stresses and an underwhelming policy response from China. Equities: Stay neutral for now, while underweighting EM…
The Italian 10-year government bond yield jumped 25bps, returning to the upper end of the range that has prevailed since late May, while the Italian MIB equity index plunged -3.7% with some Italian banks suffering losses of as…
Highlights Prediction 1: A major financial downturn will trigger the next major economic downturn, and not the other way round. Prediction 2: The straw that will break the back of a fragile financial system will be the global long…
Highlights German real estate and real estate equities remain a worthwhile multi-year position, especially in relative terms. The dominant stocks are Vonovia, Deutsche Wohnen, LEG, and GSW. Swedish real estate and real estate equities…
When Italian bond prices decline, it erodes the value of the €350 billion of BTPs held by Italian banks and also weakness their balance sheets. Investors start to get nervous about a bank's solvency when…
Highlights The global 6-month credit impulse is likely to turn up in the fourth quarter. This warrants profit-taking in some pro-defensive equity sector, regional, and country allocation... ...for example, in the 35 percent…
Highlights Without a true banking union it is impossible to have a true monetary union. The result is a fragmented monetary policy. A fragmented monetary policy with an inflexibly rigid fiscal policy is a recipe for economic and…