Founder and CEO, Europacifica Consulting

Naomi Fink

Founder and CEO

Europacifica Consulting

Macroeconomics

The UK’s referendum to exit Europe and the ensuing gyrations in global markets warned us against complacency in the face of event risk. Vigilance for unexpected surges in risk-aversion is all the more merited given some signals that the flood of ever-greater liquidity from developed country central banks may soon be peaking.If unconventional policy bears diminishing returns, as cautioned recently in reports from the <a href="https://www.imf.org/external/np/pp/eng/2015/060815.pdf" target="_blank">IMF</a> (citing spillover risks) and <a href="http://www.bis.org/publ/work570.pdf" target="_blank">BIS</a>, it may be possible that either risks associated with over-accommodation or the more manageable risks of exit will inevitably drive volatility higher.  We take stock of some of the most obvious event risks, as well as risks not yet associated with a specific event or events that might also emerge as catalysts in latter 2016, and their potential impact on currency and asset markets.

The UK’s referendum to exit Europe and the ensuing gyrations in global markets warned us against complacency in the face of event risk. Vigilance for unexpected surges in risk-aversion is all the more merited given some signals that the flood of ever-greater liquidity from developed country central banks may soon be peaking.If unconventional policy bears diminishing returns, as cautioned recently in reports from the IMF (citing spillover risks) and BIS, it may be possible that either risks associated with over-accommodation or the more manageable risks of exit will inevitably drive volatility higher.  We take stock of some of the most obvious event risks, as well as risks not yet associated with a specific event or events that might also emerge as catalysts in latter 2016, and their potential impact on currency and asset markets.

Event Risks, Catalysts and Volatility in Latter 2016

Asia Economist and CEO, Centennial Asia Advisors

Manu Bhaskaran

Asia Economist and CEO

Centennial Asia Advisors

At Centennial Asia Advisors, we tell it like it is. We have no vested interests, no need for a China wall, and no reason to skew our outlook any other way. With over 30 years experience covering Asia’s political economy, you can be sure our conclusions and analyses are based on the unadulterated facts. Through years of fine-tuning our research methodologies, we deliver a quality of macroeconomic analysis few other houses can match.

Centennial Asia Advisors is an independent research and advisory firm that works with governments, multilateral institutions, financial firms and leading MNCs.

Economic Policy and Strategic Advisors

<ul><li>At a time of growing unease about political and economic risks in major economies, and continued uncertainty over the strength of the US recovery and its implications for the Federal Reserve’s monetary policy, investors have flocked into assets in Asian EMs.</li><li>The question is whether this perception of the relative safety of Asian emerging markets will remain now that valuations in Asian markets have expanded so much. We think a moderation of such capital inflows is forthcoming.</li></ul>

At a time of growing unease about political and economic risks in major economies, and continued uncertainty over the strength of the US recovery and its implications for the Federal Reserve’s monetary policy, investors have flocked into assets in Asian EMs.The question is whether this perception of the relative safety of Asian emerging markets will remain now that valuations in Asian markets have expanded so much. We think a moderation of such capital inflows is forthcoming.

Information Technology Consultant

Ishita Jain

Thematic (Sector/Industry)

A few weeks ago, I wrote a piece titled Blockchain in the Financial Services Industry with the aim of shedding some light on this new and upcoming technology. The discussions ensued seeking clarity on the concept of blockchain and how it can actually be applied to financial services. It seems that while there is ample documentation available, much of it is indecipherable to those new to this concept. Consequently, this piece is meant to demystify the blockchain concept which should help the readers understand potential applications and comprehend insights written by my peers.

A few weeks ago, I wrote a piece titled Blockchain in the Financial Services Industry with the aim of shedding some light on this new and upcoming technology. The discussions ensued seeking clarity on the concept of blockchain and how it can actually be applied to financial services. It seems that while there is ample documentation available, much of it is indecipherable to those new to this concept. Consequently, this piece is meant to demystify the blockchain concept which should help the readers understand potential applications and comprehend insights written by my peers.

<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/010/306/original/Market-VIX-and-macroeconomic-volatility-GDPVol-CPIVol-VIX_chartbuilder.png?1468568433" class="editor-image img-responsive" data-smartkarma-image-id="10306"><figcaption class="figcaption">The Market and Macro Volatility (Source: FRED)</figcaption></figure> There are good surprises, and then there are the other kind, and the market of late has delivered quite a few of the latter. Fortunately, as we pointed out in our <a href="https://www.smartkarma.com/insights/macro-chart-focus-brexit-and-the-yen" target="_blank">post-Brexit review</a>  the “chaos premium” was quick to subside as markets realized that an exit from Europe is not so rapidly orchestrated.  We also pointed out however that the circumstances underlying the event may be one contributor to a longer-term market risk premium to be imposed upon…

 The Market and Macro Volatility (Source: FRED) There are good surprises, and then there are the other kind, and the market of late has delivered quite a few of the latter.   Fortunately, as we pointed out in our post-Brexit review  the “chaos premium” was quick to subside as markets realized that an exit from Europe is not so rapidly orchestrated.  We also pointed out however that the circumstances underlying the event may be one contributor to a longer-term market risk premium to be imposed upon…

Macro Chart Focus: Surprises and Uncertainty Premia

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

In this brief piece we take a considered stance on the likelihood of Brexit actually proceeding in the wake of June’s referendum and examine some of the strategic implications for equity investors in terms of the potential shifts in sovereign and corporate governance.

In this brief piece we take a considered stance on the likelihood of Brexit actually proceeding in the wake of June’s referendum and examine some of the strategic implications for equity investors in terms of the potential shifts in sovereign and corporate governance.

United Kingdom

Lloyds Banking Group plc, through subsidiaries and associated companies, offers a range of banking and financial services. The Company provides retail banking, mortgages, pensions, asset management, insurance services, corporate banking, and treasury services.

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Lloyds Banking (LLOY LN)

Event Risks, Catalysts and Volatility in Latter 2016

The UK’s referendum to exit Europe and the ensuing gyrations in global markets warned us against complacency in the face of event risk. Vigilance...

Naomi Fink

Will Capital Still Flow into Asian EMs?

At a time of growing unease about political and economic risks in major economies, and continued uncertainty over the strength of the US recovery...

Manu Bhaskaran

Blockchain & Bitcoin 101

A few weeks ago, I wrote a piece titled Blockchain in the Financial Services Industry with the aim of shedding some light on this new and upcoming...

Ishita Jain

Macro Chart Focus: Surprises and Uncertainty Premia

There are good surprises, and then there are the other kind, and the market of late has delivered quite a few of the latter. Fortunately, as we...

Naomi Fink

Brexit; Unintended Consequences

In this brief piece we take a considered stance on the likelihood of Brexit actually proceeding in the wake of June’s referendum and examine some...

John-Paul Smith

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