UBS | With central bank balance sheets at their largest on record, yet risk assets struggling, investors are increasingly questioning the efficacy of Quantitative Easing (QE). We take a detailed look at the impact of QE on asset prices through its portfolio effects, as well as throught he dovish policy signal it sends.
James Alexander via Historinhas | Scott Sumner made a somewhat light-hearted comment in a recent post that “no-one can predict recessions”. It made me stop and wonder what was the point of Market Monetarism in that case. The essence of MM is that market forecasts of NGDP Growth should guide monetary policy, should be monetary policy.
UBS | The current global growth scare, which has recently focused on the US, has set off a train of events that, rather implausibly, is leading to modest outperformance by EM (v. DM) equities in down markets so far this year. We explain this very simply; worries over the US economy have pulled the dollar lower and have, for now, taken some, much – needed, currency pressure off EM equity markets.
Low oil prices can be good for the drivers, but they are simply catastrophic for the oil companies and the markets. Many top oil firms have seen their earnings sharply reduced and their credit ratings cut. It is expected that prices will rise again, but not before late this year or 2017. The big question is whether the industry will be able to survive until then.
Monetary policy is not equipped to control the real economy and the financial economy at the same time. Its aim is to moderate the fluctuations in real variables, GDP, employment and prices. But this destabilises the financial market, fuels speculation and increases household and corporate debt with the banks.
Atlantic Sentinel | Year 2003 was a different era. The US waged a war of choice in Iraq; Vladimir Putin’s Russia was seen as a paper tiger; China’s economic boom roared but didn’t threaten; Dubai was unknown; and the United States seemed like it would forever be an oil importer. Much has changed.
UBS | This report is a compilation of individual stock previews ahead of the reporting season. As ever in the real estate sector, don’t expect too many surprises.
BARCLAYS | We have pursued two apparently unrelated topics in our recent research. One topic has been the identification of fundamental traits that have the best track record of making stocks outperform. Some of these are counterintuitive. For example, the stocks of companies with high profit margins have underperformed the stocks of companies with low profit margins over the past 15 years
UBS | We’ve marked to market for 4Q15 and lowered our 2016 Brent/WTI oil price forecasts ($/Bbl) to $42.50/$40.00 (from $57.50/$52.50), reflecting the much weaker 4Q outturn and lower entry point into 2016. In the near-term the market remains oversupplied and we expect global inventories to continue building until 3Q16, dampening any potential price recovery.
The markets are connected via expectations. If there is a price change in one market, then this information is transmitted to other markets pricing in easily assimilated expectations within a similar time horizon. All consumer durables markets have an eye on the future. In other words, they have a financial component although the product which is trading on the market has an industrial use. For example, the oil and bond markets.