Some Thoughts on the Fed’s Latest Dovish Surprise

The Fed delivered another dovish surprise. Whilst the Fed might have been hoping to assuage markets, we think the latest move will unnerve them. We are maintaining our broad macro calls for now but acknowledge that excessive Fed dovishness will surely test us. Continue reading “Some Thoughts on the Fed’s Latest Dovish Surprise”

Powell Sticks to the Script; We Remain Bullish on Equities and the Dollar

Fed Chairman Powell testified before the Senate today and the House tomorrow. Not much has changed since the January 30 FOMC meeting and so Powell basically hewed to the Fed’s recent script of stressing “patience” and “flexibility.” We remain bullish on equities and the dollar and bearish on bonds. Continue reading “Powell Sticks to the Script; We Remain Bullish on Equities and the Dollar”

DM Sovereign Rating Model For Q1 2019

We have produced this ratings model to assist investors in assessing relative sovereign risk over a wide range of Developed Markets (DM), 33 in all. We have decided to adhere to MSCI methodology and have moved Hong Kong, Israel, and Singapore from EM to DM.

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DM Equity Allocation Model For Q1 2019

We are pleased to introduce our new Developed Markets (DM) Equity Allocation model. Building on the success of our EM model, this new framework extends our analysis to cover 24 DM equity markets. Our analysis is meant to assist global equity investors in assessing relative sovereign risk and optimal asset allocation across countries within the DM universe.

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99 Problems But The Fed Ain’t One

The Fed delivered an extremely dovish hold today. In doing so, we fear that the Fed has given in too much to the market and its tantrums and recent Fed messaging leaves a lot to be desired. There are still a lot of potential risks to the market ahead. As such, we see potential for further volatility and swings in market sentiment if this current round of Fed messaging turns out to be too dovish, as we suspect. For now, however, markets have the green light to buy equities and sell the dollar.

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US Shutdown Ends (For Now), Debt Ceiling Battle Up Next

The US government has reopened after the partial shutdown that lasted 35 days. Yet the clock is running since the stopgap spending bill only funds the government through February 15. Even if a lasting deal is reached, this recent dysfunction suggests problems ahead as the debt ceiling comes back into effect March 2.

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US Shutdown Update

The debt ceiling and government shutdowns are two separate and distinct issues in the US. Yet problems dealing with the two issues are very much correlated, since the root cause is usually a dysfunctional or divided government. Here, we focus on the government shutdown. We will deal with the debt ceiling in another piece.

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Possible Brexit Scenarios

UK Parliament is scheduled to hold its Brexit vote tomorrow. The outcome is expected sometime between 7-10 PM London time, and is likely to result in a rejection of May’s plan. What’s unclear is what happens next. Here, we try to put together some possible scenarios. For the most part, the scenarios would seem to favor UK assets for anything other than a no-deal Brexit.

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Uridashi Issuance in 2018

In 2018, foreign currency Uridashi issuance totaled $9.0 bln. This represents a slight increase from $8.5 bln in 2017 but falls short of the $12 bln issued in 2016. Continue reading “Uridashi Issuance in 2018”