Money For Nothing – 2013 Themes and Trades

MACRO AND INVESTMENT THEMES

> Parts of the global economy have been in dire straits for much of 2012. Most developed economies continue to suffer from structural problems tied to too much debt and thus a weak level of growth. However, major global central banks are in a race to expand their balance sheets. This will benefit certain asset classes more than others.

> ZIRP and central bank balance sheet expansion will continue to have unintended consequences. While aggressive monetary policy might not have the desired effect in the economies where it is administered, it will have an effect on global asset prices and investor behaviour.

> The European economy has performed poorly for the past two years. Even core countries entered a recession this year, but leading indicators provide insights into potential changes in outlook for some countries. We also update our structural views given recent developments.

> In the US, the economy remains weak. Some commentators argue the US is already in a recession but leading indicators and our recession models point towards whether the economy is facing a recession or not. We lay out the path ahead for the US economy.

> Among global equities, some emerging markets are seeing an upturn in their leading indicators, while others have yet to see any upturn. We analyze the evolution of leading indicators in major emerging markets.

> Structural headwinds persist, but we are seeing cyclical improvements in some economies. In this report we highlight which countries are seeing upturns.

> FX and equity volatility has been extremely low. Volatility has remained subdued even as the economy has weakened and political and economic uncertainty has increased. We provide updates on the timing and magnitude of future changes in volatility.

If you would like to find out more about these views and others like them, please contact us.