/ 28 May 2020
What did Funds Buy and Sell during the 1Q? Over the last couple of weeks, “13F” filings from the largest funds were published in the US, which gives us a snapshot of the stocks owned on March 31st by some of the largest funds. In our opinion, the information is useful since it gives clients a view into what some of the largest funds have been doing in the current volatile environoment. There are some limitations on this data since it is delayed by almost fourty five days. In addition, this is an incomplete picture as many funds are not required to disclose their short positions, and some exceptions allow funds not to disclose certain holdings (activist shareholders can delay their filings). Lastly, funds can appear to own a stock, but in reality the investment is hedged.
/ 18 May 2020
Banking on China..? When Chinese Growth data are compiled at a local level, by politicians explicitly incentivized to deliver good news, and then added up at the National level to satisfy political leaders and their desire to cement their power with good news, it is hardly surprising that very little bad news ever escapes the Chinese vacuum. Indeed, the Brookings Institution showed this last year (see "A Forensic examination of China's National Accounts," March 2019, Wei Chen et al.)
/ 11 May 2020
The UST yield curve slope traditionally compares the difference between longer-dated tenors with very shortterm bond yields, like 10 and 2 years. Essentially, the slope shows the difference between the expected future state of the economy, reflected in 10Y UST yield, and shorter-term maturities, which are driven by more immediate economic conditions and associated with monetary policy. The UST maturity spread is signaling the relative perception of economic vitality and pricing power (i.e. capacity to increase prices as reflected in inflation) between the medium-term against more immediate conditions.
/ 4 May 2020
As the COVID 19 crisis unfolds, making the unimaginable a reality, one should start thinking what would be the medium to long-term political and economic consequences. We know that this kind of event has always consequences. The 2001 terrorism attack changed forever the travelling experience and the Big Recession of 2008 caused a permanent reduction in world GDP growth, a situation many believe led to the increased in populism around the world.