Insights

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Pain in Ukraine Investment Insights

Pain in Ukraine

Developments over the weekend have seen further stress and confusion related to the build up of Russian troops on the Ukrainian border. Several countries have evacuated their embassy staff from Kiev due to fears of invasion, although the Ukrainian president has stated that such concerns are over-played and the Russian diplomatic machine continues to deny any intention of deploying troops into the country. In this Macro Flash note, Daniel Murray explains what is going on and explores the issues in more detail.

Daniel Murray

4 min read
The equity market is clearing its sinuses Investment Insights

The equity market is clearing its sinuses

The S&P500 index of large cap US equities more than doubled between the March 2020 lows and the end of 2021. It was up by over 25% last year alone, by about 50% in the three years to end 2021 and by more than 350% over ten years, a compounded annual rate of growth of about 16.5%. This is a remarkable track record and reflective of general strength across global equity markets. In this context it is not surprising that many equity markets have experienced a pullback over recent days. Increased market jitters have been associated in particular with expectations that the Fed will soon start to hike rates and shrink its balance sheet. Negative sentiment has been additionally fuelled by concerns about the Omicron Covid variant and geopolitical tensions between Russia, the US and the European Union concerning Ukraine. In this Macro Flash Note, Daniel Murray assesses the market outlook against this background.

Daniel Murray

5 min read
Participation Explanation Investment Insights

Participation Explanation

Markets breathed a sigh of relief after last Friday’s monthly US jobs report was released. It showed that non-farm payrolls increased by 531,000 – which was more than expected – and that the unemployment rate fell to 4.6% in October from 4.8% in September. However, one feature of the US labour market that is stubbornly refusing to improve is the participation rate. This statistic records the proportion of people of working age who are either employed or actively looking for work. In this flash note Daniel Murray assesses why the participation rate remains lower.

Daniel Murray

4 min read
US Inflation Comment Investment Insights

US Inflation Comment

Yesterday’s US CPI release was much stronger than expected with headline inflation (measured as the year-on-year % change in the CPI) at its highest since September 2008 and core CPI inflation (ex food and energy) the highest since 1996. This has bolstered fears about a return to the stagflationary conditions of the 1970s which saw the unpalatable combination of high unemployment and high inflation coexist for a number of years. Rising commodity prices, supply chain problems (such as for semi-conductors), declining global trade and commercial rigidities resulting from Covid restrictions are all cited as reasons why we should be concerned about the rise in inflation being more than transitory.

Daniel Murray

3 min read
US infrastructure - $2.3 trillion is not enough Investment Insights

US infrastructure - $2.3 trillion is not enough

Last week the White House released details of its long-awaited infrastructure spending plan, to be known as the American Jobs Plan (AJP). When rumours first started to circulate about the plan it was thought it would be worth around $1 trillion. However, last week’s announcement outlines proposals for spending $2.3 trillion over the next eight years, equivalent to about 1% of GDP per year or about 10.5% of 2020 nominal US GDP. For reference and to give a sense of scale, the Congressional Budget Office’s latest projections from February 2021 anticipate spending about $6.4 trillion and $4.5 trillion on defence and Medicaid respectively over the next eight years. In this Macro Flash Note, Daniel Murray summarises the main elements of the AJP and assesses whether it is enough to address America’s infrastructure needs.

Daniel Murray

10 min read

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