News Archive

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 […]

Re-fixing the Yuan

One of the biggest losers from the recent flare up in trade tensions between the U.S. and China was the Yuan. In response, the PBOC lowered its official Yuan mid-point to USD 6.8649 to minimize further currency weakness. However, this has led to a widening spread between the onshore (CNY) and offshore (CNH) exchange rate, […]

Buying safer assets

Despite a strong recovery in stock prices this year, inflows into equity ETFs and mutual funds have remained uneven. At the same time, inflows into products that track bonds have been resilient. This suggests that weak global growth, trade war concerns, and worries about earnings have weighed on investor sentiments, even as the S&P 500 […]

Understanding the curves

Crude oil has rallied by nearly 40% year-to-date. However, this recovery was arguably driven by temporary geopolitical factors (supply outages in Iran & Venezuela), which is reflected by a steadily rising front-end of the futures curve. In contrast, the long-end of the curve, which reflects the long-term outlook of both supply and demand has remained […]

Cry for Argentina

Argentina’s peso has fallen massively vs. the dollar since last year. Tight monetary policy has been insufficient to arrest  inflation, currently rising at 55% YoY. The main issue driving the risk off move in Argentina is the fact that the pro-reform President Macri is losing ground in polls ahead of October elections to the resurgent […]

The healthcare debate

Pharmaceutical (PBL) stocks continue to face headwinds as mounting political pressure on drug pricing gains momentum. With drug prices already falling at 1% YoY, reports of key lawmakers coming to a bipartisan agreement aimed at increasing competition from cheaper generics should further weigh on drug prices. However, health care service providers (HES) will continue to […]

Stressed, financially

From earnings results we have seen so far, 2018 was a good year for U.S. banks’ net-interest margins (NIMs), which were buoyed by the Fed’s four rate hikes. Despite this, Financials have under performed Utilities as yields have fallen. More recently, the under performance of Financials has been even greater than what the falling yields […]