Research

Sign up to our research email list and gain free access to our latest piece.

To view research in full (except for webinar clips and other pieces labelled ‘free’) you need a paid subscription.

Mind the exits

  • The increase in VaR is sparking a broad-based, and potentially indiscriminate, unwinding of leveraged positions
  • The first question is which other leveraged positions are at risk
  • The second question is whether fund flows will hold up
  • Central bank rescue easing or liquidity packages are likely only with a much bigger sell-off or more obvious signs of systemic leveraged distress

Read more »

  • No Comments

What rotation can’t cure

  • The violent rotation in equities is sparking hopes of a fundamentally-driven rally
  • It has been aided by record fund inflows and a spike in CB liquidity
  • But the details of both the flows and the liquidity leave us skeptical
  • Expect the rotation to continue, but not the rally

Read more »

  • No Comments

Free clip: Who pulled the plug?

  • Free clip from first ten minutes of 3 July webinar
  • Even as the rally continues, it does so on ever more fragile foundations
  • The problem lies neither with the economy, nor with central banks being slow to lower rates, nor even with politics
  • It is that the liquidity which fuelled markets in H1 looks increasingly likely to be turned off
market has momentum webinar replay screenshot

Read more »

  • No Comments

Did someone pull the plug? (free to view)

  • Recent softness in risk is not just the fault of France
  • The underlying drivers of the rally have been faltering
  • The outlook for H2 just darkened considerably
Did someone pull the plug presentation cover

Read more »

  • No Comments

When star stands for confusion

  • Recent statements are a reminder of the importance of neutral rates for policymakers
  • But they also illustrate confusion - not only about the level of r*, but even as to what it is supposed to be measuring
  • At the heart of the confusion lies a failure to distinguish between the impact of balance sheet on markets, and of rates on the economy
  • This potentially leads to very different conclusions for r* and policy
r-star down, return on capital up

Read more »

  • No Comments

Seven lessons from complexity

  • Markets and economies should be analyzed as 'complex systems'
  • Their fat tails and emergent behaviours fit poorly with traditional linear economics, but very well with complexity modelling techniques
  • Lessons from other complex arenas apply equally well to investing
Under conventional economics, volatility shouldn't form clusters - but it does

Read more »

  • No Comments

Short-term exuberance alert

  • We have been arguing markets face greater risk of melt-up than melt-down
  • But the speed and extent to which many levels are deviating, not only from fundamentals but even from many technicals, is striking
  • Expect fund inflows to continue to swamp such concerns - but watch for any sign of faltering
trailing 12m cb liquidity down, equities up

Read more »

  • No Comments

The asymmetric Fed

  • The significance of last week's FOMC lies neither with the rate view, nor with the earlier, larger taper of QT - mildly bullish though both of these are.
  • It comes instead from the stark asymmetry of the response function which was described.
  • While the true test remains with the details of the liquidity outlook, in conjunction with the Treasury refunding this opens the door to a continued cross-asset rally through Q2.
cash assets at small and large us banks still far from 2019 lows

Read more »

  • No Comments

Free replay clip: Why are financial conditions so benign?

  • Free clip from first ten minutes of 2 May webinar
  • The exuberance in risk assets is less a consequence of a stronger economy than a driver of it
  • The expectation of rate easing was never critical - which is why the exuberance has largely persisted even as yields have backed up
  • It is instead the direct consequence of investor crowding following easy central bank balance sheet policy - and vulnerable to any reduction in CB liquidity
- Markets seem abnormally exuberant - It's not just the stronger economy - It's the impact of easy money

Read more »

  • No Comments

Cliff notes on credit

  • Relative CCC cliff risk has risen to record highs
  • This partly reflects hidden idiosyncratic risks from low recoveries and abandoned covenants
  • But mostly it signifies the macro suppression of index spreads
ccc-b spread differential ratio to hy index spreads at record highs

Read more »

  • No Comments
Share:

By subscribing, I consent to the privacy policy.

Sign in with Microsoft
satori insights logo

© 2024 Satori Insights Ltd

satori insights full logo transparent

Login successful.

Continue reading