Strategy

Cloud gazing

All seems well with markets, but there are always clouds on the horizon. With price inflation remaining contained, one risk we think deserves more airtime is how a corporate margin squeeze could cause the next downturn. The next US Federal Reserve chair is also a mystery that could rock markets and President Trump’s objectives will be central to what candidates have to promise if they’re to get the big job.

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Strategy

Kabuki and Super Mario

There doesn’t seem to be much interest in Japanese investment ideas by foreigners, which makes me wonder whether we are collectively missing a trick. Whether you consider culture, technology, economics or social developments, Japan remains quite different from the western perception of what is mainstream. This makes it an interesting part of the investment universe as it could provide idiosyncratic, diversifying investment opportunities.

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Portfolio Thinking

Smash hits and crash dips

2017 marks a number of financial anniversaries; the 1987 stockmarket crash, the 1997 Asian financial crisis, and the beginning of the global financial crisis. As we haven’t really experienced an extreme boom or crisis recently, looking back will be a refresher as to what could occur, but also provide a wider perspective on investment returns. Nothing is as evocative of the past as its music, so we accompany our look back with a soundtrack of those hits we think have withstood the test of time, and those hits that we would rather forget.

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Macrobites

The year of politics is not quite over…

Last week, in one of our daily morning team meetings (when all the economists, strategists and fund managers gather round to exchange market-relevant news and views), each and every one of the contributions was about politics; including Brexit, Germany, Italy, Catalonia, the Netherlands, the US and Japan.

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Economics

China hard landing risk - What can we learn from Japan?

This is the fourth and last in a series of blogs that looks at the risk of a hard landing in the Chinese economy. One problem when assessing this risk is the lack of historical precedents. Very few countries underwent debt build-ups of Chinese proportions, and those that did were usually very small, open economies. The one exception is 1990 Japan which displays some striking similarities with today’s China.

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Strategy

Off the record, on the QT, and very hush-hush

Quantitative easing is a bit of a puzzle. It doesn't work in theory, but appears to have worked well in practice. Should we be worried as that process now edges into reverse with the advent of 'quantitative tightening'?

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Economics

Tremors, tensions and typhoons

The second part of my Asia macro tour swung by Tokyo where in a similar set of meetings I witnessed an even greater sense of belief in the status quo. The impression was that the situation is currently fine, so why make unpopular changes?

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