Macro Economic Research
26
Sep
2016
Fiscal prominence


• Fiscal stimulus is now the consensus solution to low growth  
• Except, that is, among the people that decide: politicians  
• Yields should rise in 2017, but not due to helicopter money (etc.)
Dario Pe...

LSR Daily Note
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23
Sep
2016
Australian banks, bonds and the yen


• Latest BoJ policy acrobatics unlikely to halt Japanese demand for AUD bonds  
• Yen hedging activity spilling over to higher Australian repo rates  
• Banks’ funding costs drift higher, adding to profitab...

LSR Daily Note
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22
Sep
2016
Scarcity Trap

With inflation falling short of their targets, the Bank of Japan and the ECB are approaching scarcity limits on QE. We distinguish between ‘good’ and ‘bad’ tapers, with very different implications for bond yields. We...

LSR Macro Picture
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22
Sep
2016
Fed’s costly failure => 2017 bear market


• Money and credit growth, supportive pre-2014, has become inflationary  
• Credit is booming to buy back stocks, which are now vulnerable to rate hikes  
• The economy will soon get even more overheated, implyin...

LSR Daily Note
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Investment Strategy
26
Sep
2016
October 2016

The unviability of open-ended QE by the BoJ and ECB has helped core yields back up recently, giving rise to fears of a major bond market sell-off as in 2013. However, there are important differences from the 2013 UST taper tantrum. Nominal...

LSR Strategy Chartbook
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21
Sep
2016
Taper tantrums unlikely for now


• The scarcity problem implies tapering, but not necessarily a major tantrum
• Yield targets, demand-supply and strategic demand remain supportive
• But, eventually, it comes down to one decisive factor – global inflat...

LSR Macro Strategy
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16
Sep
2016
Bracing for higher volatility


• Volatility likely to rise more after being unusually low this summer
• Seasonality, valuations and political risks to keep markets on edge
• Fed to hike 3-4 times in a year, but USD upside still limited
• Govvies mini...

LSR Asset Allocation
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14
Sep
2016
Death of diversification?


• Stocks and safe bonds selling off in tandem questions conventional wisdom
• Brief episodes of sell-off unlikely to erode the safe-haven value of Treasuries
• Countercyclical inflation is probably the only reliable threat t...

LSR Macro Strategy
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