We all knew that markets would be volatile this year, but I doubt that many thought that they would see something like the 26% single-day fall in the share price of Meta, Facebook’s parent company.
Read full articleJanuary usually starts with a lot of ‘hopium’, that is, irrational optimism. Consumers come back from holiday, well rested and ready for the new year. A new year full of new opportunities: #newyearnewyou, #2022, and #thisismyyear fill reels on Twitter and Instagram.
Read full articleMost investors in South Africa (SA) have more exposure to the South African equity market than to any other global market. This unfortunate strategy has cost them much in terms of returns over the long term but will continue to benefit them in the short term.
Read full articleAnd so, the new year is upon us! Because we always get the same questions at the beginning of each year, I thought I would use this year’s first newsletter to introduce you to the main themes that we are considering and to provide you with some forecasts.
Read full articleAt the end of 2021, we find ourselves at the tipping point in terms of global macroeconomics. For more than a decade, most of the world’s largest economies have been running an (unsustainable) monetary experiment, keeping interest rates at historic lows, and forcing liquidity into the system with tools such as quantitative easing (QE). Forewarned by what happened in Japan, where longer-term QE nationalised the bond market and supressed growth rates, many of these large economies know that they need to change course.
Read full articleLittle over a week ago, the South African Reserve Bank (SARB) decided to increase interest rates by 0.25%, as we expected they would. With a slight 3-2 majority, the Monetary Policy Committee voted in favour of an increase rather than to keep the rates unchanged.
Read full articleAnd then, it finally happened... Inflation in the developed world erupted. Germany’s inflation came in at 4.5% in October, whereas inflation in the United States (US) rocketed to a 30-year-high of 6.2%. In the United Kingdom (UK), the Bank of England warned consumers that inflation could breach 5% in 2022. In many ways, inflation levels in the developed world are starting to look like something out of a third-world horror movie.
Read full articleA few years back we set out to estimate the economic cost of load shedding in South Africa (SA). Because our focus was purely on the economic side, we excluded the social costs associated with load shedding, which would, of course, have inflated our findings.
Read full articleDemocrats in the United States (US) will do what Democrats do, that is, spend more (mostly on the “not rich”) and tax more (mostly on the “rich”). In the past, we discussed the proposed $1.75 trillion infrastructure plans that President Joe Biden has, as a clever way of increasing the long-term returns (gross domestic product (GDP) growth) of the US economy.
Read full articleRecently published research showed that pandemic stimulus failed in emerging markets. Among the top emerging and developed economies, there is no correlation between the stimulus programmes of 2020 and the strength of the ensuing recovery.
Read full articleLast week, markets were concerned about the persistent nature of higher-than-expected inflation, its implications for tighter monetary policy, and the eventual negative impact of tighter monetary policy on financial markets.
Read full articleGiven the recent deceleration in COVID-19 cases and the pickup in activity indicators, we believe that the United States (US) Federal Reserve (Fed) will follow through with their planned taper announcement at the upcoming policy meeting in November.
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