Economy
Investing in summer: A threat or an opportunity?
One of the frequent sayings on the stock markets is sell in May and go away, in allusion to the volatility on the equity markets in the summer period, a situation that begs us to ask if, in this period, the markets could undergo some kind of turbulence or volatility.
Inflation and oil, the thin black line
After the crisis that broke out in the USA in 2008, central banks acquired an even more prominent role than they already had to keep their battered economies afloat. With interest rates at all-time lows, the major economies had to resort to non-conventional measures and put debt-purchasing programmes under way, those known as QE (Quantitative Easing).
The US stock markets break their all-time high records
In July, the S&P 500, which represents the capitalisation of the largest US corporations, reached all-time highs in North American stock markets, accumulating important yields in recent years.
What are the keystones of gold prices?
Gold prices depend largely on the trend in real interest rates in the USA, i.e. nominal rates minus inflation. The graph compares gold (blue) with the real 5-year interest rate in the USA (orange, on an inverted scale). The lower the real interest rate, the higher the price of gold.
Brexit’s uncertain future
The latest elections held in the United Kingdom on 8 June last have revealed a scenario of political uncertainty in the country, aggravated by recent outbreaks of social unrest suffered in Manchester and London, which have weakened Britain’s interests in its political aspirations vis-à-vis the negotiation of the future of the Brexit with the European Union.
How does the monetary politics affect our portfolios?
Draghi’s statements at the end of June indicating that reflationary forces (higher nominal growth and inflation) were replacing the deflationary fears of previous quarters, had a swift impact on the financial markets, producing sharp increases in long-term interest rates and a subsequent fall in bond prices across almost all the geographic regions.
The power of diversification
On 6 June last, the Spanish entity Banco Popular was sold for one euro. The increasing withdrawals of deposits had created an unbridgeable liquidity gap. The European authorities gave the go ahead to the sale of Banco Popular, which marked the disappearance of the entity with the highest efficiency ratio in Spain.
The ISM, an indicator auguring an optimistic future
Despite the volatility and uncertainty reported worldwide in the first three months of the year, the major leading indicator, the US manufacturing index (ISM) is indicating that this country is going to undergo an improvement in its economy over the coming quarters.
The world stock market hits new all-time highs
The intense momentum or positive inertia on the financial markets today has catapulted world equity indices to new all-time highs, particularly highlighting the monthly performance both by countries in Europe, driven by the election results in France and those more closely tied to the emerging economies.
Switzerland: diversifying across borders
Diversification is understood as the process whereby we invest in more than one asset in order to reduce portfolio risk. The lower the correlation between the assets comprising a portfolio, the higher its diversification and the lower the risk associated to it.
