Hot markets, modified expectations

Feeling hot hot hot!

The UK’s weather has been hotter than Spain (apparently), debt markets –  until last week’s HY wobble – were as hot as 2007 (almost unbelievably), European earnings forecasts are cooling (all too predictably) and US earnings are heating up (artificially?)

Whatever the temperature, it’s never silly season here; but out there in the markets there’s arguably still a detachment from reality, which – as Mr Carney warns – may arrive sooner than expected.

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A new world order?

At first look, the agreement signed by the BRICS to establish a new development bank (NDB) appears to be the strongest challenge yet to the global settlement that grew out of Bretton-Woods.
Analysis of data from Oxford Economics shows that emerging economies now contribute 36% of global GDP, rising to 46% in next 10 years, yet control only 11% of the voting power at the IMF. This has long been a point of contention, with agreements reached in 2010 to rectify this currently stalled in the US Congress, further highlighting the disparity in power under the current system. Continue reading

Tales of the (un)expected

News that hundreds of people successfully wagered on Luis Suarez biting someone during this year’s World Cup finals should come as no surprise. This is a good example of events that at first appear quite unexpected are not really so. Mr Suarez had been banned twice before for the same offence so odds of 175-1 seemed worth a punt. Continue reading

Tin hat or sun hat? A return to volatility this summer?

Summer could bring greater volatility than we’ve seen of late, certainly in energy prices and possibly across other markets making it tougher to get equity and debt away. Beyond the short-term crises is the much bigger problem of the slow grind of the Eurozone recovery, still hampered by its still heavy debt burden – time for stronger action?

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Lies, damn lies, statistics and expectations

So the World Cup has finally kicked off in Brazil, with the opening games already seeing some controversy and upsets. The hosts won their first match 3-1 against Croatia, helped in no small way by a rather dubious penalty. The Dutch shocked everyone by annihilating the holders Spain 5-1 (could have been eight or nine), and England started off with a loss against Italy, but manager Roy Hodgson had so masterfully set expectations no one was clammering for sackings. Continue reading