Equities versus cash investment rules: an update

Previous posts have described two simple investment rules for switching between global equities and US dollar cash. The rules still favoured equities at the time of the last update in October 2013. The MSCI World index has since returned 11% in … Read More

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Why the “new normal” for UK Bank rate may be 4% not 2.5%

Bank of England Governor Mark Carney has suggested that a “normal” level of Bank rate is now about 2.5% versus 5% before the financial crisis. This suggestion is defensible based on the recent spread between bank interest rates and Bank … Read More

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Why Eurozone economic news should improve

The Citi Eurozone economic surprise index has been negative since the spring but the balance of news may now improve, based on an expected revival in global activity and respectable narrow money trends. Growth, however, will probably lag other regions. … Read More

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UK inflation firming on schedule

Previous posts extending back to last summer argued that the trend in UK inflation would shift from down to up in spring 2014 in lagged response to faster monetary growth and associated economic strength. The higher-than-expected June number reported today … Read More

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Chinese money trends signalling solid H2 economy

Chinese monetary statistics for June suggest that economic growth will rise through end-2014. A post two months ago noted that monetary trends had turned positive and were signalling a summer revival in economic momentum, following a slowdown in early 2014. … Read More

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Japanese economic outlook still weak, based on money trends

Recent Japanese economic news has mostly disappointed. Real consumer spending recovered by only 1.3% in May after an 8.1% drop in April. Core machinery orders plunged 17.4%, to a 15-month low. Export volumes were down 2.2%, still failing to benefit … Read More

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Should investors chase frontier markets?

The MSCI frontier markets index has risen by 17.4% in US dollar terms year-to-date*, far outpacing gains of 6.2% and 6.0% respectively for MSCI’s developed and emerging markets indices. Is this a reflection of the fundamental attraction of these markets … Read More

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UK Bank rate hike needed to offset bank-led monetary easing

The MPC is debating when to raise interest rates. No member, presumably, thinks that policy should be loosened. A backdoor easing, however, is taking place as banks continue to cut lending and deposit rates. An immediate rise in Bank rate … Read More

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A “monetarist” perspective on current equity markets

Forecasting indicators were giving a more positive message for the global economy and markets at the start of the second quarter. The MSCI World index returned 5.1% in US dollar terms over the quarter, up from 1.4% in the prior … Read More

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UK economic boomlet to extend, based on May money data

UK monetary trends remain expansionary, suggesting  no slowdown in economic growth and rising medium-term inflation risks. The preferred narrow and broad monetary aggregates here are non-financial M1 and M4, i.e. comprising holdings of households and non-financial firms. Non-financial M1 grew … Read More

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