The economy and capital markets were heading decidedly downward before the terrorist attacks intensified the public’s overall feeling of uncertainty and risk. While the post-September 11 panic selling has subsided, markets are still pricing in considerably higher risk premiums than existed prior to the terrorist attacks. This increase in risk-aversion affects economic growth and corporate…
With world markets mired in a severe synchronised slowdown, the long-term outlook for U.K. and continental European equities remains uncertain. While capital markets may take short-term comfort in further interest rate cuts by the European Central Bank and the Bank of England, extra liquidity and lower borrowing costs may not be enough to encourage nervous…
The U.S. dollar’s recent decline against other major currencies has led to speculation that this long dollar bull market may be over. A secular decline or sharp drop in the U.S. dollar is not inevitable, but it cannot be ruled out.
The recent rally has led to speculation that the euro may be embarking on a prolonged bull market and the outlook for the euro/U.S. dollar exchange rate clearly hinges on the relative strength of the U.S. and euro-zone economies, and the outlook for relative capital demand in particular.
The failure of conventional fiscal stimulus, the growing evidence of widespread deflation, and the impending crisis posed by mounting government debt all indicate that the authorities must attempt to reflate the economy by any means possible, including currency depreciation. However, the efficacy of yen depreciation is far from certain, as its impact on consumer prices…
Despite the dramatic fall in equity prices since March 2000, today’s S&P 500 still carries a great deal of intrinsic risk relative to its past.
While most economic indicators are clearly heading south, U.K. consumers continue to hit the shops, showing no signs of retrenchment. Rising financial wealth and steady growth in real disposable income have helped sustain strong consumption growth over the last few years, but the fall in equity value, moderating real income growth, and the threat of…
Argentina may have dodged the bullet with its recent debt swap, but pressures will continue to build. Because emerging markets are notoriously volatile and unpredictable, risk-averse investors should tread cautiously in this asset class for the time being.
An introduction to U.S. TIPS, their performance and correlations to other assets classes, as well as the various rationales for a TIPS allocation and investing strategies.