Archive | September, 2016

The U.K.’s Kinky Curve


The current yield on 50-year gilts stands at 1.40%, about 10bps below that of the 30-year gilt at 1.49%. This condition has prevailed for quite a while now (the yellow line is the yield curve one year ago; the green line is the yield curve now): Whereas an inverted yield curve is often cited as a […]

Automakers Must Hate This Chart


There are a lot of disruptions taking place in the auto industry. Uber, Lyft and many smaller regional competitors are driving taxi drivers crazy and have made it easier than ever to get around without owning a vehicle. Companies like Car2Go, Zipcar, (and BMW?) give consumers the freedom to drive while not having to worry about […]

European Equity Correlations Have Dramatically Declined


European stocks are once again adding diversification for equity investors. The 65-day correlation between European stocks and the MSCI World Index has fallen to 47% from 74% on 9/8/16. That peak in correlation was the highest in over four years. And correlations are falling when we break out European equity by sector as well. Below […]

One Reason Diversification Isn’t Paying Off Right Now


The Asian financial crisis and the bursting of the tech bubble in the US flipped the inflationary/deflationary axis of the economic world. The primary price concern in the world from approximately 1970-2000 was one of rising prices (i.e. inflation). Since then the world has been much more concerned with falling prices (i.e. deflation). Investors everywhere seem […]