TSS (Tactical Style Selection): Emerging Markets - Liquidity-based Multi-Asset Allocation - July 2015

by Michael J. Howell21. July 2015 15:16

EM Liquidity Now Above Average

·      Quantity of EM Liquidity has jumped faster than quality

·      EM investment risks have tumbled over past six months



Global View - Wall Street Facing Stiffer Head Winds: 4 Arguments July 2015

by Michael J. Howell21. July 2015 15:11

Wall Street Facing Stiffer Head Winds: 4 Arguments

Numerologists worry about 2015, because severe market corrections usually have a regular 8/9 year pattern: previous peaks occurred in 1972, 1981, 1989, 1998 and 2007. With this year slated as the likely start of Fed tightening, there are understandably wider concerns. Fed Chairperson Janet Yellen delivered another warning to politicians and markets this week that US rates are set to rise. Market participants remain torn between a start-date of September 2015 and early 2016for the first rate hike, but both her words and recent movements in the Fed’s balance sheet seem to indicate a sooner, not later move.



Emerging Markets Latest GLI July 2015: Cash Returns to Emerging Market

by Michael J. Howell10. July 2015 15:30

Emerging Market Liquidity surged in June 2015 to 57.9 (‘normal’ range 0-100) from an index of 50.0 in May and 27.2 a year ago, according to the EM component of our GLI™ (Global Liquidity Index). The EM Liquidity trend is plainly upwards, with the index now sustained above the neutral threshold of 50 for the first time since 2007/08. In contrast, the recently popular Frontier Markets are suffering from extremely poor liquidity. They remain stuck at the bottom of our ranking tables and their liquidity continues to lose momentum.


Global Liquidity Latest, July 2015

by Michael J. Howell8. July 2015 15:30

The GLI™ (Global Liquidity Index) stands above average, having risen slightly in June 2015 to reach 61.4 ('normal' range 0-100) from 60.8 in May and from a near-term low of 32.0 in February. Liquidity leads, so this February Liquidity hiccup may be currently pressurising markets and disturbing economies. Looking ahead, the Global Liquidity Index has already rebounded, but the overall picture shows continuing divergent trends in its two dominant Global Liquidity engines.


Global View June 2015: A Final Blast of Cash? The China Connection

by Michael J. Howell30. June 2015 12:05

Weakening bond markets are telling us something important. Global Liquidity is rising again, driven largely by the Eurozone and China. The latter is important because of its size. Assuming that the People’s Bank continues to ease, global bonds will sell-off more; the US dollar will remain strong and EM stocks and commodities should rise.


June 2015: The Month China Overtook America

by Michael J. Howell29. June 2015 11:08



Global Liquidity Conditions (Risk) Emerging Markets, June 2015

by Michael J. Howell26. June 2015 17:00

The Emerging Market component of our Global Risk Index fell to 61.4 in May, compared to 64.5  in April and the recent peak of 91.1 in January.


Global Liquidity Conditions (Liquidity) Emerging Markets, June 2015

by Michael J. Howell26. June 2015 12:35

May 2015 proved another positive month for Emerging Market Liquidity with the EM component of our GLI™ (Global Liquidity Index) hitting 48.8 from 46.7 at end-April and 21.9 a year ago. Although the index lies a tad below the neutral threshold of 50, the EM Liquidity trend is plainly upwards.


Global Liquidity Conditions Major Markets, June 2015

by Michael J. Howell26. June 2015 12:15

Our aggregate measure of Global Liquidity conditions, the GLI(Global Liquidity Index) rebounded to an index value of 56.3 in May 2015. Global Liquidity has zig-zagged over recent months: a backdrop subsequently reflected in similar fluctuations in world bond and forex markets, in business activity, but not so far in equities.


Thoughts on Greece

by Michael J. Howell25. June 2015 23:19
A deal will be done (1) This is not a bailout. The bailout was in 2010 and private creditors effectively got out then. The big lenders now are Governments and we are talking about robbing Peter to pay Peter. In short, the IMF/ EU will lend to Greece, so that Greece can pay them back. This is about debt roll-over, not new lending. (2) Debt roll-overs can be tricky, but in this one only Governments are involved. The lesson of Lehman (where a private sector solution was sought) is a clear one. Don't let it happen again. If Greece were raced out of the Euro, markets would ask 'who is next?' (3) Zimbabwe and Argentina are not good models to follow, i.e. devaluation failed. This is why Greece will stay in the Euro, even if she technically defaults. (4) Greece needs incentives e.g. low tax zones, not austerity, to make itself grow. (5) Europe needs a pan-European banking system. This crisis is trickier because local banks, holding local debt are involved. If Deutsche Bank were the only bank in Greece, there would be fewer issues. Politicians will encourage M&A and consolidation. Investment conclusion: bearish for Euro near-term (US$ bullish). Bullish for Eurozone banks long-term.


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