Macro Matters is a global investment blog brought to you by LGIM’s Asset Allocation team. We’re focused on sharing our most compelling thinking to help you become more informed investors.

Latest articles

Strategy

What can the art market teach us about investments?

It turns out, quite a lot. The ability of real assets to retain their inflation-adjusted value over time is hugely valuable. Relatively small differentials in annual returns can compound up into huge differences in outcomes over long periods of time. However, knowing whether an asset is in a bubble comes down to a debate about appropriate discount rates.

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Macrobites

Bitcoin: The rise of a new currency?

Bitcoin was the talk of the town in the last few months of 2017, rising from relative obscurity to headline news as it rocketed in value. But can it overcome hurdles to cross over from a speculative asset to a mainstream currency?

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Economics

Overrated? Why ratings agencies could be a contrarian indicator

How does emerging market debt typically perform after being downgraded from investment grade? Does forced selling lead to underperformance or is it all in the price by then?

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Strategy

Worryingly bullish

It’s a new year, but some things haven’t changed. The "fear of missing out" market continues. However, with the rally come worryingly bullish sentiment indicators. One of our favourites is flashing red for the first time since 2010.

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Portfolio Thinking

Pulp Fixion

At times, over 50% of fixed income managers outperform their benchmark indices. Understanding the drivers for that is important for manager selection, but far too often it's attributed to the wrong causes. It's time to pulp the fiction and instead recognise the roles that non-benchmarked investors and new issue premiums play.

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Economics

Fool in the shower

Congress has passed a surprisingly powerful fiscal stimulus which markets appear to be underestimating. Strong growth might be cheered initially, but given that the US economy is already operating at full capacity, it risks overheating.

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Strategy

2018 – Inflation inflexion risks

US inflation was lacklustre in 2017, despite falling unemployment. This combination was very supportive for equities. In 2018, a key risk is that we see a similar wage pick-up in the US to what we’ve already seen in Central and Eastern Europe, where labour markets are also tight. As a result, we believe there are potential benefits in holding US dollar and US inflation exposure in portfolios to help mitigate the risk of higher interest rates undermining equities and other risk assets.

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