While investors in developed markets remain largely blessed with fair winds and a following sea, the same is clearly no longer true of emerging markets, where there are significant stresses appearing in many asset classes including equities, currencies and bonds. It looks like emerging markets investors will continue to face challenges, as they are being driven by the economic recovery of the United States, which in turn is delivering the unwinding of quantitative easing and the normalization of short term interest rates. These challenges are occurring as the way in which Emerging Markets investors operate is itself changing fundamentally. Travelling

The March Market Voice focused on three factors which explained the seemingly perverse EUR strength in the face of an increasing USD interest rate advantage: The EUR was historically cheap in real terms when it bottomed. Central bank – especially China – diversification away from the dollar may have been a source of strength. The relative value of equity markets may have been compelling enough to overwhelm the negative rate picture. We felt these three factors were generating substantial enough flows into EUR that defeated the negative interest rate environment. But in March when the article was published, it appeared

This article was authored by: Paul Jackson, Joel Sebold and Jack Sarkissian. Traditional measures of volatility do not address a key concern of traders and risk managers needing to make proactive decisions: what is market volatility now? Realized volatility is typically calculated as standard deviation of backward looking historical daily price moves over some past period such as three months. As such, this measure is not appropriate or reactive enough to use for intraday volatility which can fluctuate widely.  Realized volatility lags and is slow to adjust to dynamic changes in volatility on a time scale of minutes during which

A useful proprietary database available in Eikon is the Refinitiv monthly survey on global portfolio allocations of capital across different asset classes and geographic regions. Below is a snapshot of the global portfolio allocation of UK institutional investors and the historical tracking for global bond (government and private) and equity holdings. Equities and bonds dominate other asset classes but with significant variation over time.  For instance in the run up to the Brexit vote, equity holdings dropped presumably reflecting diminished risk appetite. Given that bonds and stocks are the principal asset classes, the gains for one should come at the

Thomson Reuters LPC Leveraged Loan Monthly – April 2018 Contents: Leveraged Loan Market Overview U.S. High Yield Bond Market Overview Investor Overview CLO Market Analysis List of recent CLOs / League Tables Loan Mutual Fund Flows & Returns Primary Market: Leveraged lending stands at $362 billion year-to-date, with institutional volume making up 69% of activity at $251 billion. Although issuance levels are down 30% from last year, the institutional share has stood firm at around 70%. Looking at leveraged lending by purpose, refinancing activity drove activity in the first quarter and continues to make up the bulk of volume early

The US Federal Reserve Bank (Fed) made it clear in the March Open Market Meeting statement they anticipate two more rate hikes this year and bumped the 2019 outlook up to three hikes from two. This on balance adds to a Fed rate policy that contrasts with other major central banks which remain on hold and in most cases are still in quantitative easing mode. As an example, ECB policymakers are now debating how to phase out their unconventional tools and normalize policy in a time of robust growth but weak inflation – this will not happen before September. The

Market swoons are bad news for dealmakers. Stock-market plunges can erode the value of bids involving acquirers’ stock, make bankers reluctant to lend, and change the outlook violently. Recent market tumult, with the S&P 500 Index down 6 percent last week, doesn’t qualify as an extinction event – at least not yet. It does, however, make it harder to overlook regulatory dangers attached to certain possible deals, like the combinations of CVS Health and Aetna and AT&T and Time Warner. Last year was the fourth in a row with over $1 trillion of announced transactions involving U.S. companies worth over

Beware any chief executive without a Plan B. Westfield boss Peter Lowy is the latest to lack one, declaring on Thursday that despite a big drop in the value of a takeover bid from Unibail-Rodamco, there is no alternative to the sale he and his mall operator agreed in December, originally worth $25 billion including debt. The French buyer also says it has no intention of changing the deal terms. Investors could be forgiven for having other ideas. The transaction unveiled just before Christmas promises to establish a hulking landlord overseeing a sprawling empire from offices in Paris to shopping

Despite the recent correction in US equities, Fathom do not think that 2018 will be the year in which the US equity market bubble bursts. One of the reasons we hold this view is that global growth looks set to remain strong, and businesses and consumers are in very good spirits. These points are reflected by Fathom’s Economic Sentiment Indicators (ESIs). Refresh the chart in your browser | Edit chart in Datastream The US ESI, updated last week, showed that economic sentiment increased last month, climbing from 5.5% in December to 6.1% in January. The ESI is not intended to be an

The recent pullback in stocks has felt brutal. As the chart below confirms, an 8% drop from the January 26th peak has only been exceeded a handful of times during the past decade. What has, without question, compounded this sense of brutality is that is has followed an exceptionally benign market environment that investors have become accustomed to over the past year or so – the maximum drawdown since Trump’s election victory was just a shade over 1% – highly asymmetric price action. Exhibit 1: S&P500 Drawdowns – Cumulative And Monthly Source: www.amareos.com Concomitant with the correction, equity implied volatility has spiked–

GNC is overdosing on Chinese medicine. The ailing U.S. vitamin and supplements retailer is selling about 40 percent of the company to Harbin Pharmaceutical. The state-controlled enterprise also will appoint nearly half the directors on an expanded board, giving it quite a bit of muscle. Faced with declining sales and a market value that has been sliding even more quickly, Pittsburgh-based GNC hired Goldman Sachs in 2016 to conduct a strategic review. Turnaround efforts that included converting more stores to franchises haven’t been enough to contend with growing online competition. As recently as November 2013, the company’s shares were trading

Contents: Leveraged Loan Market Overview S. High Yield Bond Market Overview Investor Overview CLO Market Analysis List of recent CLOs / League Tables Loan Mutual Fund Flows & Returns Primary Market: After a year with record levels of issuance, leveraged lending recorded over $68 billion of volume in January, led by nearly $54 billion in leveraged institutional volume. January levels were down 27% when compared to the beginning of last year. Refinancing activity continued to drive leveraged lending with almost $39 billion in volume; leveraged new money made up 43% of January issuance. January institutional issuance was steady month-over-month with