News Archive

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 […]

All about a pipeline?

Russian energy stocks have been very resilient despite the sharp drop in oil prices (see: “A look at Russian energy”, Dec 6th, 2018). Currently, we are starting to see weaker oil production as OPEC and Russia look to cut supply to support crude prices. However, Russian energy firms also supply 40% of the E.U.’s natural […]

Less expensive

Equity Risk Premium (earnings yield minus 10y bond yields) is a theoretically effective way to evaluate the relative attractiveness of bonds vs. equities. In the U.S., falling bond yields have increased the ERP by almost 1.4 percentage points since last Oct. The increase has been much smaller in Europe (0.8 p.p.), because of a weaker […]