25. November 2015 13:39
The October 2015 GLI™ (Global Liquidity Index) rose to a reading of 42.8 (‘normal’ range 0-100) from a revised down 34.2 index for end-September and an essentially stable end-August index of 37.9. The GLI™ measures the growth of credit and cash savings relative to trend and it currently tells us that the pace of leading money flows into World risk asset markets is sub-par.
24. November 2015 07:53
Risk officers should beware. At the very least, holding less risk when the Fed starts to hike rates seems prudent. More generally, looking 6-12 months ahead, the odds of a negative shock to Global Liquidity will remain high. Ironically, they are probably higher than in early 2008, because then having fallen sharply through 2007 the US currency was not strong; most economies seemed robust; policy-makers, led by the US Fed, apparently were on top of (or so they claimed) the growing funding problems and no one thought that the US Treasury would allow a key financial counter-party (Lehman) to fail. Today, the financial planets line up more ominously. Economies are either bafflingly slow speed, or like the Eurozone heavily lop-sided.
23. November 2015 10:30
From a risk perspective, Emerging Markets are looking slightly better. Overall liquidity inflows hit an index value of 27.7 in October, or up from 19.6 in September. Set against a ‘normal’ range of 0-100, this remains unattractively low, but at least it is improving. China remains the overwhelming negative influence on the sector. Our concern, emphasised since the February 2015 Lunar New Year, is that the People’s Bank (PBoC) is tightening, and not easing, policy.
19. November 2015 16:49
Even though the GLI™index of World liquidity conditions rose in October 2016 to a value of 43.8 from September’s much lower 35.0, this volume of liquidity is still not particularly supportive of risk assets. The recurring 8/9 year pattern of market crises – 1973/4, 1980/1, 1989/90, 1997/98 and 2007/8 – threatens to repeat again in 2015/16?
13. November 2015 18:16
The October 2015 Emerging Market sub-component (EMLI™) of our GLI™ (Global Liquidity Index) rose to a reading of 27.7 (‘normal’ range 0-100) from an index of 19.6 for end-September. The GLI™ measures the growth of credit and cash savings relative to trend and it currently tells us that the pace of these leading money flows into EM risk asset markets is sub-par.
11. November 2015 18:16
The October 2015 GLI™ (Global Liquidity Index) rose to a reading of 43.8 (‘normal’ range 0-100) from a revised down 35.0 index for end-September and an essentially stable end-August index of 38.8. The GLI™ measures the growth of credit and cash savings relative to trend and it currently tells us that the pace of leading money flows into World risk asset markets is sub-par.
1. November 2015 18:20
Our models continue to favour the US dollar against the European currencies. Admittedly, we also see risks to the tempo of the US economy. However, a major factor driving the US dollar higher is the general shortage of US dollar funding. This makes this an unusual cycle. Similar factors were behind the 2008 surge in the US dollar as major investors sought to close leveraged loan positions. Looking ahead, we see Sterling as particularly vulnerable, given this deteriorating global financing backdrop and Britain’s large current account deficit.On top, a Chinese RMB devaluation also still looks likely to us. For those more wary of an upcoming US recession, hedging into gold makes sense. We have always argued gold is the obvious beneficiary of a new QE4 policy, and such a monetary inflation looks highly likely ..… sometime ahead.
26. October 2015 14:17
We are convinced that China will have to devalue the RMB currency over coming months. This is likely to deliver another psychological shock to markets, with many investors fearing a further round of deflationary pressures. But is a RMB devaluation really deflationary for financial markets or for the World and Asian economies? We argue in this report that a weaker RMB will reinforce cost deflation, but it is more likely to be associated with monetary inflation, not monetary deflation. In other words, the medium-term impact of a Chinese devaluation could be bullish for risk assets and particularly for Asian markets.
23. October 2015 10:40
Latest Emerging Market Liquidity readings confirm persistently poor numbers for end-September 2015. The Emerging Market component of our broader GLI™ series (Global Liquidity Index) remained soft, testing a sub-par index level of 31.2 (‘normalised’ range 0-100).
23. October 2015 10:35
Liquidity risks remain elevated. Our Global Liquidity Index (GLI™) for September 2015 is stuck at low levels of 39.0 (‘normal’ range 0-100), or close to the low August reading. Such poor liquidity underscores a ‘Risk Off’ investment environment characterised by high volatility and by the likelihood that economic activity levels will weaken noticeably over the next 6-12 months. We have already warned that low and falling US liquidity levels already point to a modest economic recession by early 2016.