Higher Volatility and Credit Spreads Ahead

All of our leading indicators for credit spreads and volatility point to wider volatility and higher credit spreads over the next two years.  The credit cycle is long in the tooth, and the best predictor of future credit spreads is…


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US Unemployment Rate is Not its Former Self

Structural factors are ensuring that the unemployment rate in the US today is not what it was in periods past.  Yellen has seemed to be more in the camp that the decline in the labour participation rate (PR) since the…


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Market health warnings

Variant Perception keeps clients informed of market themes, trading strategies and tactics.  For example, here is something we wrote for clients on August 12th before the recent market correction. If you would like to become a client, please contact sales@variantperception.com…


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Despite the rout, excess liquidity will prove to be supportive

  Stock markets are experiencing a classic crash pattern.  Volatility has spiked and sharp sell offs are often being followed by powerful rallies.  As with previous crash patterns, we would expect markets to continue to gyrate wildly for around the next…


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EM Capital Outflows Gather Pace

We discussed in April that global reserve assets had begun to fall on an annual basis.  This has continued, and the level of contraction is now as great as it has been since at least 2004. Capital flight from EM…


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Spanish Economy Remains on Cyclical Upswing

For all of Spain’s entrenched structural issues (as we detailed in our April thematic, Spain – Still a Hole in Europe’s Balance Sheet), leading economic data continues to point towards a cyclical recovery in Spain. Real M1 is growing at…


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Keep Your Eyes On Aussie Housing Leading Indicators

(from our Tactical from July 14th) We continue to focus on Australian housing leading indicators to help with timing on our structurally bearish Australia outlook, set out in our March thematic Aussie Housing and Banking Boomerang.  Lower rates in Australia…


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Investors fully invested, but negative

We have a buy signal on AAII sentiment. Bearish retail sentiment often offers contrarian signals to enter the market and as the top two chart shows there are very few bears at the moment according to the AAII survey. This…


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The euro to be supported in risk-off scenarios (mostly)

The ECB’s commitment to extra loose monetary policy through forward guidance and QE has resulted in the euro to becoming one of the darlings of the funding currencies.  US corporates such as Nike, Apple and Coca-Cola have taken advantage of…


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Money surges in Europe, growth to follow

If you ignore the ongoing Greek sideshow, rarely has European money growth been as accommodative as it is today. Europe has enormous structural problems of too much debt, an inflexible currency and an ageing population, but cyclical factors are very…


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