Central Banks face a difficult predicament in trying to reduce inflationary pressures in their respective economies whilst also alleviating the probability that these economies do not face a prolonged period of negative GDP growth which could lead to a recession.
Bonds have traditionally been a reliable asset class in periods of market stress. In the current economic environment, bonds have been falling alongside equities and this blog takes a deep dive at why this is happening and do bonds still offer protection to your portfolio.
As the world is now embracing a low-carbon economy at a record pace, this blog examines how this could impact fossil fuel investments.
This blog overviews the tried and tested strategy of pound cost averaging. This strategy, combined with self-discipline and sticking to your investment plan can be beneficial for investing – even when markets are volatile.
While the situation between Russia and Ukraine remains extremely delicate and evolving at a daily rate, in this blog we give an overview of how the situation is impacting ebi portfolios and the economic impact on the market.
Critiques of Passive investing According to Bank of America Merrill Lynch, passive investing now accounts for 45% of all US assets (up from 25% a decade ago), with equity passive funds amounting to c.$3 trillion at present.Our attention has recently been drawn to another high-profile investor, Michael Burry (article here), who believes that Passive investing is responsible for creating (another) bubble in asset prices, comparing it to the sub-prime mortgage bubble in that “price-setting in that market was not done by fundamental security-level analysis, but by massive capital flows based on Nobel-approved models of risk that proved to be untrue.” He follows other notable investors, s…
In March 2018 it appeared that global growth would exert pressure on interest rates, forcing the rate of inflation ever higher, making bonds a weaker investment prospect. Things have not worked out quite as market participants then might have expected.The Fed’s policy changes and quantitative tightening in 2018, combined with the high existing global debt levels snuffed out any inflationary impulse. Following the COVID-19 fuelled stockmarket crash bond yields all over the world are now 1% or less.
The first Quarter of 2020 was the poorest equity market performance since 2008 for the S&P 500, but that was not the weakest asset class.The oil market had a truly dreadful 3 months, falling by a massive 66%, its worst ever quarterly return. The refusal of Russia to agree to cuts in oil output levels by OPEC+, the OPEC nations plus Russia, led to Saudi Arabia discounting their oil prices and gearing up oil production to force prices lower.
The Coronavirus panic has changed quite a few things in its short life.We no longer stand within two metres of each other without being forcefully reminded to move apart, we no longer seem to mind washing our hands several times per hour or the restrictions being placed on our everyday lives in the name of “flattening the curve” , whilst governments across the world have awoken from their apparent apathetic attitude towards the economy’s performance. The latest US and UK stimulus packages, in addition to the usual Central Bank monetary responses, cutting rates, printing more money, provided banking system liquidity infusions, are now leading governments into the realm of fiscal policy or state spending; it is almost as if the Coronavirus has decided that we were to have a UK socialist government irrespective of the last election result.
