A victim of its own strength

The Swiss National Bank’s sight deposits—that is, the amount of cash commercial banks leave with the SNB—has jumped sharply since last month. Typically, a rise in sight deposits suggests that the SNB is intervening in currency markets to weaken the franc. It clearly isn’t working. The Swiss franc has rallied relentlessly vs. the euro This […]

Will autos be the first crack in credit?

Delinquencies (90+ days) in auto loans and leases continue to rise, as they approach all-time highs. Outstanding auto loan balances were up almost 5% in Q2, and are fast approaching a record USD 1.3tn. What is most notable is the divergence between delinquencies and the unemployment rate. One of the reasons for this is 50% […]


Is China a currency manipulator? While there is little doubt that the recent RMB depreciation occurred without PBOC approval, it isn’t clear China meets the three criteria to be considered a manipulator. China does run a significant bilateral trade surplus with America, but the other two points are less clear cut. Is China’s current account […]

Checkup with Doctor Copper

Copper prices are fast approaching their 2017 and 2018 lows and risk breaching these technical support levels, as risk sentiment sours. President Trump’s additional tariff announcement last week spooked risk assets, with notable weakness in the RMB. The PBOC has signaled more monetary policy easing is coming, which could be supportive of copper prices. However, […]

A public exposure to private markets

As public equities enter a period of earnings weakness driven by sluggish economic growth and margin pressures, investors are left looking for alternatives. One interesting universe has been private equity (PE). Despite economic uncertainties, the world’s largest PE firms have been raising ever larger funds to invest globally. Interestingly, the public listings of these PE […]

Shorting Japan

Japanese equities are taking a beating this week. Its earnings season over the next few weeks appears particularly gloomy. Over the last 12 months, the global growth slowdown has been especially troublesome for Japanese equities, which have steadily unperformed DM equities. The underperformance has also been a common theme in the 12-months leading up to […]

A revenue winter

While trade wars are getting all the news lately, there are other developments investors should be paying attention to. The trade-weighted dollar has surged by nearly 10% this year, as the aforementioned trade war issues and concerns over global growth have led to safety-flows into USD-assets. In the past, similar instances have been problematic for […]

Sticking with hard currency bonds

While EM debt been on a strong run since last September, the local currency bonds have been lagging their hard currency peers since this past March. We expect this divergence to continue for two reasons. Firstly, the weakness in oil prices and EM trade flows should continue to weigh on global FX reserves. This should […]