Macro Economic Research
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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21
Sep
2016
BoJ accelerates toward a wall


• The BoJ laid out the route to tapering, retreating from the monetary base target  
• Interest rate targeting is a well-worn mistake  
• Footnote on interest rate spike is a logic bodge: warning to longer term i...

LSR Daily Note
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Investment Strategy
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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07
Sep
2016
The dollar simply hasn’t weakened enough


• Continued dollar strength is inconsistent with the economy’s soft patch
• An overvalued dollar remains a restrictive influence on the global economy
• We continue to favour tactical dollar shorts and recommend buying...

LSR Macro Strategy
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