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Posted On 26  Nov  2018  

The Brexit Deal

The Brexit deal negotiated by Theresa May falls far short of the option Great Britain has always been given – that is to remain in the EU. It is being pushed through on the tenuous stance that the Referendum in 2016 was sacred and the ‘will’ of the British people must thus be respected at all costs. Democracy is paramount, even when democracy is flawed and causes self-harm. The deal is not good enough:


Posted On 07  Aug  2017  

A word on UK Real Estate

On most measures UK property is expensive. It is most expensive in the South East and in London in particular. Yields in London vary between 2% in the expensive parts to perhaps 4.5% on the outskirts. More risky properties in the Midlands and North can yield 6-7%, but most of those assets require upgrading. There is also a shortage of stock. Foreign buyers and big players domestically are moping up anything decent that comes to market. Institutional investors have moved into prime property because yields on Government and corporate bonds are so low. If these institutional investors are right, then inflation should remain low for very long time. Signs that inflation will remain low is indicated by the fact that UK rates are not going up anytime soon. Sterling has weakened considerably since Brexit, but inflation remains subdued. The BoE forecasts that the UK economy will slow down a little


Posted On 27  Dec  2016  

Putting 2017 into Perspective

27/12/2016 In 2016 we got many things right. China didn’t collapse. Brazil rallied hugely. The US Dollar went up. Bonds sold off. Emerging Market currencies sold off, except for the Russian Ruble. We were on the wrong side of Brexit, but still managed to take advantage of a falling GBP. We hoped that Trump wouldn’t win the US elections as that would change many dynamics. But he did win and some changes will happen and on many others even his administration will be constrained. These are our thoughts on what 2017 may have in store for us: USD We are probably more than ¾ of the way in the US Dollar rally. Infrastructure spending under Trump will push up US rates and US Inflation more significantly compared with European Rates and European Inflation. But the weaker EUR, GBP, JPY and weaker EM currencies will feed inflation all over the world.


Posted On 21  Oct  2016  

Market impact of US election results

October 22, 2016 It is time to prepare for the increased volatility in financial markets which will results as we approach and go through the US elections. A rise in volatility these days implies a higher USD, higher JPY, and higher Gold. The biggest impact on the markets will be on the day of the election results as the polls and actual vote count start to trickle in. Here is our assessment how markets might react depending on who wins. Please note that these are not long term predictions. Only a possible scenario as to what might happen on the day of elections and how then the future might transpire. In real life one has to act according to the unfolding of actual events. These observations should not in any way be construed as advice. Market Hillary Clinton Donald Trump Possible reasons US Dollar Up Down Trump is anti-trade and


Posted On 16  Oct  2016  

Mrs. May’s Little Britain

I have just returned from London after three weeks. Things are not looking so good. The disunited Kingdom, this island is a conglomerate of union of nations, all of which not sure of their own national identities.  Collectively all are international traders, shop keepers and shoppers. The economy is hugely focused on service industries, having decimated the manufacturing sectors, and is thus import dependent. In a global connected world of supply chains, almost nothing, except tables and chairs can be made without imported materials or parts. With the British Pound falling, the price of those imported goods is rising. British consumers will be paying more for their purchases as a result. This means higher domestic inflation. Which in turn means higher interest rates, implying higher mortgage and other borrowing costs. That means lower profits for companies and lower net savings for consumers and less of what money can buy. Which


Posted On 11  Jun  2016  

The mispricing of risk by analysts and markets

Britain’s referendum on EU memberships has negative implications for GBP, EUR, British economy and the European economy. What is bad for Europe is not good for the global economy. In the event that Britain votes to leave the EU, it is expected that Sterling will sell off significantly against the USD and less significantly against the Euro. No one has a crystal ball and analysts are all over the place on the extent of the sell-off. Some think that on the downside perhaps a 10% reduction in value should suffice. Others think that GBP could fall to 1.15 to the dollar. Analysts hedge their bets by making longer term predictions when we are not asking them to do so. We want to know what will happen a day or two before the vote and critically on the day and a couple of days after. The answers are really quite complex.


Posted On 28  May  2016  

Brexit Vote – Why Great Britain will vote ‘Yes’ and stay in Europe

28/05/2016 Most political leaders, dare I say it, ‘most leaders’ are driven not by the love for their country and its people but by gains in personal power. Their long held beliefs, when on the rare occasion they have them, are compromised on their journey to grab power. We observe that there are very few principled politicians. George W Bush, Tony Blair, Nicolas Sarkozy, Silvio Berlusconi, and now Donald Trump are all examples of self-absorbed leaders for whom the self is far more important than the collective. The previous leaders of Greece, who syphoned public money into their own pockets, didn’t care about the Greek people. Argentina has similarly played a repeated game of roulette with its own citizens. In Britain Boris Johnson, Nigel Farage, and members of the cabinet who are support the Brexit campaign don’t care about Britain. They care only about their narrow vision of a Britain


Posted On 10  Mar  2016  

Volatility timing

Volatility timing is extremely hard in practice. This simply because volatility can be very volatile. We have been researching volatility across all asset classes since 2008 and we’ve discovered some interesting relationships. We have learnt that primitive notion that there is a relationship between risk and return is completely false. Taking more risk over the short or long term often doesn’t pay off and the measures used to calculate risks being taken retrospectively don’t take account of the actual risk experienced when short term path of risk is taken into account. These measures often understate risks actually experienced. Volatility, at its worst, is like having a cardiac arrest. The patient can experience a near death episode and in some cases the patient actually can die. Financial death is common among day traders. It is proven fact that close to 40% lose money every year and over 5 years 95% of


Posted On 10  Mar  2016  

AlgoAM 2016 Global Macro Market Outlook

Please view it here


Posted On 19  Dec  2015  

Climate change could cause consumer confidence and consumption to contract

19/12/2015 I was in Delhi, India recently. Delhi was dirty. The streets were dirty and the air was dirty. I didn’t leave the hotel unless I had to. I had no desire to visit museums or shopping malls. I wanted to buy presents for family and ended up not spending. My son recently came back from Beijing, China after an exchange program. The smog, he told us, made it impossible to go jogging. Even in the gym, the air was dirty. “I wouldn’t go back to work in China. People try not to go out unless they need to” he told us. “How can they deliberately poison their own people like that?” I asked. In 2006 I created a series of ABN AMRO Climate Change Indices. The concepts were simple. In one Index I looked at all the environmentally friendly sectors, Solar, Wind, Geothermal, Hydro, Energy Storage, Waste Management, Water