Insight into the Impact of Credit Disequilibrium on Financial Markets
How well have credit disequilibrium models predicted year to date equity returns?
At the beginning of 2013, Credit Capital Advisory put out a note on asset allocation and how credit based disequilibrium models can help understand the general direction of equity price movements. This was the general summary: The ex-ante estimates for 2013 show a...
Osborne turns on the subprime tap: The new help to buy to bust policy
The Chancellor of the Exchequer's big new idea is to more than double the amount of subprime loans in order to expand home ownership. This will of course lead to a housing boom, fuelled by falling credit standards, and then a spectacular bust costing the UK tax payer...
The outsourcing of economic policy to central banks can only end in failure
When Moodys downgraded the UK on Friday, it argued that mounting debt levels in a low growth environment have impaired the sovereigns’ ability to contain negative shocks. So was the downgrade a direct result of the UK’s “austerity” approach and would “stimulus” have...
2013 Asset Allocation – A credit-based disequilibrium approach
Preliminary estimates of the ex-ante natural rate of interest for 2013 - based on a credit disequilibrium framework - highlights positive profit growth for the United States. However, the ex-ante estimates for the United Kingdom imply a continued poor outlook for...
Good news for the great rotation into equities – US natural rate of interest rises for first time since 2010
Over the last few weeks a debate has broken out as to whether we are on the cusp of a great rotation into equities. Much of the focus of this debate has been trying to assess when yields on US Treasuries will start to rise, thus causing investors to shift their assets...
Why bond investors have to care more about inflation than NGDP
A recent debate on the merits of NGDP targeting between Scott Sumner and Charles Goodhart has opened up an interesting discussion as to what bond investors should care about – inflation or the level of NGDP. Goodhart argued in the FT that the “likely implications of a...