Macro Economic Research
01
Jul
2016
Three stages of Brexit risk


• Risks associated with Stage 1, a Lehman repeat, have eased  
• Next comes the economic fallout, especially for the UK  
• Stage 3, the threat of a new euro crisis, remains the biggest threat  
Dar...

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30
Jun
2016
Australia’s election and the twin deficits


• Electoral battle shaping up to be the closest in years  
• Whoever wins will need to grapple with an incipient twin deficit problem  
• The economy’s resilience to adverse shocks is diminishing Konstan...

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29
Jun
2016
Rising yen helps Japan’s growth, despite BoJ


• The huge leap in the yen has reduced both competitiveness and profit margins  
• But real household incomes are finally rising, as deflation returns  
• Mr Kuroda’s QE, now 20% of GDP, has yet to check th...

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28
Jun
2016
A European political jolt


• Political risk premia rising sharply in the euro area  
• Heightened uncertainty threatens the rebalancing and recovery now under way  
• The euro zone remains a distinctly non-optimal currency area   #@...

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Investment Strategy
29
Jun
2016
After the Leave vote


• There is little evidence of either liquidity stresses or contagion so far
• Residual downside for GBP, EA stocks probably less than pre-vote forecasts
• The outlook for EM carry in particular may have actually brightened f...

LSR Macro Strategy
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28
Jun
2016
July 2016

Post-Brexit, real trade-weighted sterling has already fallen around 15% relative to long-term trends. While a further decline cannot be ruled out, the cheap levels imply that the downside may be more limited than many market observers sugge...

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22
Jun
2016
What if we Remain?


• A Remain win will bring us back to the mundane issue of fundamentals
• We still see a constructive case for global carry led by high-beta EM
• European stocks should finally begin to turn in a decent performance too
...

LSR Macro Strategy
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17
Jun
2016
Brexit strategy


• Brexit is a short-term risk with potential long-term consequences
• We remain positioned for ‘Bremain’ but our conviction is lower
• Long Gilts, short European stocks are cost-effective Brexit hedges
• Sof...

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