USD Positioning Supports Weaker Dollar

In January and February we discussed our view that we thought the dollar would find it difficult to rally further and would instead display a modest weakening bias.  The initial leg up of the rally in 2014 was not due…


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European Recovery: Periphery Loan-growth Needed

One of the aims of loose monetary policy is to boost lending.  The theory is lower rates and greater availability of liquidity will encourage lending and borrowing, which in turn will boost economic activity.  Unfortunately, an increased supply of loans…


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Earnings to Fall Further

Profit margins are declining, and we expect them to fall much further.  As you can see from the chart below, Variant Perception’s leading indicator for wages does a very good job of leading US corporate profit margins by a little over…


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Aussie Housing Finance Rolling Over

We are already seeing cracks in the housing market in Australia.  At Variant Perception we track news articles of things in oversupply, as this flags interesting investment themes.  Normally, we’ve seen commodities in oversupply, but interestingly, Australian apartments are now…


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Commercial and Industrial Lending to Fall

You can take a horse to water, but you can’t make it drink.  This is generally the mistake made by many when it comes to credit.  If you expand the availability of credit, and make it more attractive, then more…


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Financial Conditions Keep Tightening

Financial conditions are slowly but surely tightening.  We have had one actual rate hike by the Fed, but conditions had begun to tighten before this. This is primarily a developed market phenomenon. Real M1 for the G7 has been trending…


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Inflation Alive and Well in the US

We have focused on the theme of the misplaced fear of deflation at Variant Perception frequently over the past 18 months.  At several points, markets and commentators seem to have become preoccupied with a belief that growth-destroying deflation was imminent….


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Excerpt from VP Tactical Report 9th Feb 2016: Sell EURSEK Rallies

From our Tactical Report of 9th Feb 2016: We like selling EURSEK to play the weak euro theme as the market looks towards the ECB meeting in March.  Sweden’s economy is in the midst of a cyclical upturn and leading…


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The Market and the Economy

We discussed earlier last month how investors should not confuse the market and the economy.  The market might be volatile and suffering losses at the moment, but the US economy is still ambling along.  Manufacturing is likely in a recession, but…


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Gold Miners Very Cheap to Gold

From our Tactical Report of 19th Jan 2016: Gold miners continue to cheapen to the gold price.  Using the Philadelphia Gold and Silver Index (which has the longest history), precious-metal miners are now as cheap as they have ever been…


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