Expected and unexpected turns of events

May brought global multi asset class investors a welcome boost of their 2017 year to date returns. With reports of strongly growing corporate profits over the first quarter of the year, global investors appeared happy enough to abandon the ‘Trump Trade’ as the justification for their ‘risk-on’ attitude and embraced the corporate earnings growth dynamic instead. This is not bad, because it is based on hard numbers rather than vague expectations.

Eurozone: growing apart?

Some months ago, in the context of Brexit, we considered the short-to-medium term economic prospects for the Eurozone (EZ). We observed that, while the EZ is on a positive growth trajectory, the ECB’s accommodative (monetary) policy will be required for some time yet, especially given that there were other potential risks on the horizon.

Echoes of 2007-08? Subprime fears in US car loan market

Mark Twain said “history doesn’t repeat but it rhymes”. Accordingly, the news of rising delinquencies and defaults of subprime borrowers in the US may bring back memories of the world economy on the cusp of the Global Financial crisis in 2007.

Is Japan’s economy hitting its stride?

It has been a tough ride for Japan over the past three (!) decades, suffering from persistent deflation and weak domestic demand. This week’s economic data releases suggest there is now a bright light at the end of the tunnel, a result of the concerted effort of both the Bank of Japan (BoJ) and the government to revive growth and defeat deflation.

UK Election: Political uncertainty returns

When Theresa May called the snap election six weeks ago, market reaction was positive. £-Sterling, the biggest indicator of market confidence in the UK, rose from its suppressed $1.25 level to around $1.30, where its stayed since. The reason? May’s Conservatives were a shoe-in; the whopping 20+ point poll lead the government had over the Labour party meant a landslide looked certain, thereby – in the view of international capital markets – bolstering the Prime Minister’s Brexit bargaining position and making a hard Brexit less likely.

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