Credit

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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Macrobites

Looking for a game changer

Following the recent release of our CIO Investment Outlook from Anton Eser, I’m proud to introduce Anton’s thought-provoking and non-consensus call. To round off our look at the New Year, should investors be wary of a severe market correction in 2018?

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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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Economics

Western propaganda?

Chinese GDP statistics are notoriously unreliable at signalling turning points, so I decided to test the temperature on the ground with a macro tour in Beijing. A couple of days of meetings with policymakers, academics and investors left me comforted and alarmed in equal measure.

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Strategy

Waiting for the ‘fat pitch’

A great advantage in managing money is having the ability to wait: avoiding a situation where you have to invest. This means you can pass on an investment idea simply because it doesn’t look interesting enough and wait for truly great opportunities. American baseball fans call this “waiting for the fat pitch”.

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Economics

Yo-yo clubs

Leicester city’s rise and fall over the past year mirrors that of financial risk premiums. Fundamentals are probably average but performance can oscillate wildly. The Fed wants to see monetary conditions tighten: this can come through a stronger dollar, higher risk-free rates or increased risk premiums.

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Macrobites

Oils well that ends well

US corporate bad loans appear to have peaked, suggesting limited ‘spillover’ from the oil sector to the broader economy. This should keep banks lending, the economy growing and the Fed hiking.

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