COMPLACENCY IS DANGEROUS
Sat in Davos, you might believe the global economy is in a strong position, but globally, electorates are voting for change, because while they have made sacrifices, they have seen their living standards continue to decline. Record highs for equity markets do not reflect the real economy, and while QE support for equity markets may keep attendees of the WEF happy, as they discuss ‘Responsive and Responsible Leadership’, the World Bank, (who have been one of the better forecasters of global growth), expects World GDP to be at a recessionary level of 2.7% in 2017. The World Bank’s latest release commented, ‘Stagnant global trade, subdued investment, and heightened policy uncertainty marked another difficult year for the world economy’.
This week, BOE economist Haldane spoke of broken economic theories since the crisis, a theme Macro Thoughts has consistently highlighted as the reason central banks continue to engage in policies that encourage equity markets to rally, but discourage CEOs from investing in their own company CAPEX.
Yet equity volatility VIX has dropped to a level (11.5%) that suggests there are no fears that need hedging, while the price of implied volatility for Bunds and Treasuries has dropped to around 5% for both futures contracts, despite only one of the central banks raising rates.
On May 22, 2013, the then Federal Reserve Chairman Ben Bernanke announced in a testimony to Congress that the Federal Reserve might start to taper the size of Bond purchases under Quantitative Easing, sparking a sharp sell off in bonds later known as the ‘Taper Tantrum’....
US Bond Yields....
Trump needs to take positive action....
US employment and the lack of wage inflation....
UK economic health warnings....
European political update
Northern Ireland, Italy,(why the Italian's won't have an election in the first half of 2017), Germany, France,
Following Macro Thoughts’ summary of European politics for 2017 http://www.macrothoughts.co.uk/european-politics-2017-greater-expectations-fall/, there will be updates each week.
Since 2012, top tier global Hedge, Pension, Investment and Insurance Fund managers, as well as corporates and private individuals, have benefited from Macro Thoughts’ proven insight, market commentary, hedging, and investment strategies to leverage opportunities, with positive returns on over 75% of strategies, producing double digit returns for our clients over consecutive years.
Macro Thoughts is independently researched and draws on extensive macroeconomic and market experience gained in Fixed Income, Futures, Derivatives, Bond, Forex, Commodity and Equity Index markets and from strong Global Macro investment, risk taking and strategy backgrounds. Far-reaching product knowledge across asset classes enables us to consider hedging and investment strategies that reflect our expected market trends. Macro Thoughts is directed by Keith Grindlay, whose experience spans, somewhat uniquely, both the buy and sell side, having managed trading and investment desks at top tier institutions, ensuring all strategies are evaluated for risk/reward and the optimal instrument(s) for best leveraging the strategy suggested are employed.
Globally recognised for strong analytical skills, aligned with a particular aptitude for anticipating global economic events ahead of the majority of commentators, Macro Thoughts’ independent fundamental economic research and analysis and resultant strategies have a track record that assures exceptional results, with a service that surpasses the model of bank-supplied, partisan research and stands out from the general contributions on platforms that your clients and peers already have access to. The support and value offered by Macro Thoughts, delivering written research and analysis, presentations and consulting services, is backed by decades of macroeconomic and market experience and can be tailored to your specific requirements.
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www.macrothoughts.co.uk
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