Tag Archives: capital flows

When panic selling is over, stocks could benefit more than bonds

The panic buying of essential items around the globe – from food to, fittingly, toilet paper – sparked by the spread of the COVID-19 coronavirus has been mirrored by panic selling in capital markets. It’s almost as if investors were taking cash out of stocks and bonds to buy whatever food, hand sanitiser and toilet paper they could get their hands on.

Pessimism in global financial markets has reached heights not seen since the dark days of the great financial crisis of 2007-2009, which this current crisis threatens to overtake in depth and significance. But, as news about rapid tests for COVID-19 and resilience to deal with the virus begin to multiply, could investors hope for a bottom in the capital markets’ selloff?

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A recession would threaten central banks’ independence

Central banks are again under the limelight. With Mark Carney’s departure as governor of the Bank of England next month, Boris Johnson could try to seize the opportunity to curtail the central bank’s independence.

This should not come as a surprise. Already, Johnson’s soulmate from across the ocean, Donald Trump, has been making noises about the Federal Reserve being too independent (or rather: insubordinate) for his liking.

So, if these two authoritarian populists go for central banks, what are their chances of bringing them under their rule?

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Record inflows into bonds as Bull-Bear indicator approaches sell signal

The first year of the new decade begins with markets in a much more exuberant mood than at the beginning of 2019. Some of the world’s most important stock markets reached record highs in the last month of 2019 — but do investors feel that markets have peaked?

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Contrarian ‘buy’ signal is triggered again

Uncertainty about the outcome of the Brexit negotiations has hit new highs, President Trump seems determined to scare the markets witless with his threats of escalating the trade war, debt problems in China are accelerating – the perfect background for a contrarian ‘buy’ signal.

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Negative bond yields equal negative investor confidence

Last week, investors yet again favoured bonds over any other asset class, despite central banks cooing dovish everywhere.

The Fed is cutting rates? No worries, buy bonds. The European Central Bank prepares to push rates even further into negative territory? Bonds are the ticket. The Bank of England gets the printing press ready again? Oh yes, some bonds would be great.

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Bond inflows hit record, but the rally is not over yet

It seems that nothing can break the bond rally — or deflate the bond bubble, as critics would say. Inflows into bond funds have hit a record this year, in tandem with record high bond prices, but how long can the euphoria last?

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As growth gloom deepens, Twitter offers clues to earnings

Investors started last year full of optimism and ended it surrounded by doom and gloom. This year seems to have started in a bleak mood. So how likely is it that it will end on a positive note?

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‘Buy’ signal triggered by extreme bearishness

It finally happened: investors are so bearish that a contrarian “buy” signal has been triggered. The Bull and Bear indicator developed by researchers at Bank of America Merrill Lynch is finally indicating Buy, one year after climbing so high that it triggered a Sell signal.

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Capitulation is near, and so is the Buy signal

If this is not yet capitulation, it sure feels like it. Money has been fleeing stock markets at record speed, and despite dovish signals from the Federal Reserve, investors are still not taking advantage of the buying opportunities the panic in the markets are throwing at them.

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As ‘exodus from Europe’ intensifies, watch the UK savings ratio

The list of reasons to worry in the market is growing longer by the day, and investors keep taking money out of risky assets – among them, European ones.

The phenomenon has been dubbed an “exodus from Europe” by analysts at Bank of America Merrill Lynch, who say there is “no surprise that the outflow from European high grade and high yield funds has been much more sizable than outflows from emerging markets debt funds.”

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