The ISM Manufacturing Index came out at the beginning of the month and offers a dim view of the next three months for US manufacturing as well as for stocks.  The key data we focus on in the ISM is…

The present calm in high-yield markets is entirely unwarranted and at odds with where we are in the US credit cycle.  Corporate debt to GDP in the US is at all-time highs. In the past, whenever corporate debt reached around…

A discussion of late has been whether the Fed should raise its inflation target.  We think this would be a bad idea.  Currently, with a 2% target, the Taylor rule implies the Fed Funds rate should be closer to 2%….

In this short blog, we will show how we looked at the UK economy going into the UK’s referendum to leave the EU, and why our approach meant our forecasts were not reliant on the referendum’s result.  We also show what our indicators are…

Bond yields are currently diverging in a very big way from economic fundamentals, and our valuation tools point to a rise in yields.  Normally, there is a very tight correlation between the change in the ISM prices paid survey and…

Equity prices are rising and being driven by momentum, but profit margins are set to fall further in line with late-cycle wage pressures and tightness in the labour market.  The biggest cost to businesses is the cost of employees, and…

Two of the best global leading indicators tools we have are VP’s Business Cycle Financing Index (BCFI) – which tracks financial conditions, eg are central banks easing or hiking, credit spreads widening or tightening (first chart) –  and the global yield…

(from our Tactical report of 26th July) One of the early warning signs of the 2008 crisis was the widening in credit spreads such as the Ted spread and the Libor-OIS spread.  There was a run on the shadow banking…

A theme we have been tracking throughout the summer has been the very low projected returns over the next 6 months for the utility sector globally, as investors have crowded into defensives. We highlight this below with two charts showing…

While most of the attention post-Brexit has been on the UK, we are far more concerned about Europe.  Markets and the economy operate in a feedback loop, and the performance of European banks relative to the stock market points to…