Sell-off

Portfolio Thinking

Assuming the position

We worry about sharing popular investment ideas, since the view is probably in the price. But how do we know if a trade is crowded? Positioning information can give us a clue, although it requires careful interpretation.

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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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Strategy

Inauguration crossroads

A new era has begun; what seemed inconceivable only a year ago has happened: Donald Trump has actually moved into the White House. His first week in office could be telling for the next four (or eight?) years. Disputes around the inauguration turnout aside, will we get a flurry of activity or will it be the start of Trumponomics getting bogged down in Washington bureaucracy? Alongside markets, we will be paying close attention.

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Strategy

Will Taylor rule?

Investors are constantly trying to judge the so-called “reaction function” of the Federal Reserve to understand the likely path for monetary policy. This understanding could get turned on its head in the next twelve months if Janet Yellen is replaced by Professor John B Taylor of Stanford University.

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Macrobites

The road ahead

The UK has voted to leave the European Union by a margin of 52% to 48%. Although opinion polls had narrowed during the final few weeks of the campaign, financial markets had been broadly positioned for ‘remain’ given the lead in bookmakers’ odds.

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Macrobites

Are there sharks in the water?

Some of the readers of Macro Matters have asked me whether I had perhaps written the last one, “The good and bad of low growth”, from a remote island during one of my shark diving trips, completely separated from markets, as I didn’t explicitly comment on all major events and headlines.

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