Category: Markets

Market Recap 10/03/2019

US The week just ended has led losses to US equity indices: the S&P 500 fell 2.16% to 2,743, thus failing to break the resistance line at 2,800-2,815. Similarly, the NASDAQ lost 2.46% and the Dow Jones decreased by 1.80%. This week has not brought major news for what concerns the US-China trade talks after […]

The Dollar Index: Critical Analysis

Introduction The US Dollar Index was created by the Federal Reserve in 1973. The index was initially intended to provide an external bilateral trade weighted average of the US Dollar as it freely floated against major global currencies. Consequently, the US Dollar Index [ticker: U.S.DX® ] (USDX hereon), is a geometrically weighted average of six […]

Venezuela’s Lone Survivor Under Crossfire

Introduction Venezuela is a state in chaos; this is a systemic issue that arises from many long years of economic mismanagement from the Chavismo administration which has ruled for two decades. These issues are now coming to light given the dismal state of affairs in Venezuela, the most obvious indicator of which is the hyperinflation. […]

Investing in the ETF Era

Introduction Exchange Traded Funds (ETFs) have constantly been on the rise ever since the 2008 financial crisis. Year over year, increasing amounts of assets are placed in ETFs causing their market share (especially in the United States) to expand to over 25% of total open-end funds in 2018 according to EY. This leads us to […]

Market Recap 03/03/2019

US This week saw modest gains on most American indexes, with the s&p increasing by 0.39% and Nasdaq by 0.9%. The Dow remained fairly stable with a loss of -0.02%. Overall the markets seem to be pricing in a relaxed scenario for tariffs as the deadline for trade talks between the Us and China appears […]

THE INVISIBLE GEARS – Repurchase Agreement and the (Credit) Repo Market – Part 2

Introduction After examining the main features of the repo market as well as some peculiar characteristics of the European credit repo market (http://www.bsic.it/the-invisible-gears-repo-agreement-and-the-credit-repo-market-part-1/) we would like to walk you through what happens when a repo fails (and why this might happen) and the recent reform of the CSDR, i.e. the Central Securities Depository Regulation. This […]

Market Recap 24/02/2019

EUROPE During this week European indices have on average soared by 1% . In particular, the German DAX30 started the trading week at 11’267 and closed around 11’460 and the French CAC40 opened at 5’160 and closed at 5’215, both increasing around 1.5%. Differently from core countries, the most important peripheral ones have raised below […]

Belt and Road Initiative: All that Glitters is not Gold

Description of Belt and Road Initiative The Belt and Road Initiative (BRI), also known as the One Belt One Road (OBOR) or the Silk Road Economic Belt and the 21st-century Maritime Silk Road, is a development strategy adopted by the Chinese government involving infrastructure and investments in European, Asian and African countries. It was initially […]

Forever Instruments, Maybe Equity, Never Defaulted? AT1 Instruments and the Santander Case

Introduction On Tuesday (Feb 12, 2019), right at the deadline for the decision to be made, Banco Santander announced that it had decided not to repay its outstanding €1.5bn CoCo bonds. CoCo bonds are hybrid securities mostly belonging to Additional Tier 1 capital, introduced by regulators in the wake of the 2008 financial crisis, as […]

The Invisible Gears: REPO Agreement and the Credit REPO Market – Part 1

Introduction Often overlooked and easily dismissed as a basic collateralised loan, repos (the short form for repurchase agreement) are much more. In fact, well-functioning (and possibly liquid) repos market is essential for the stability and efficiency of the “proper” securities markets. These is why we have defined them as the invisible gears of the financial […]

Value and Momentum: a Happy Marriage

In this article we analyze the advantages of combining together value and momentum long/short portfolios in many asset classes and in different geographical areas. In fact, they have historically shown negative correlation between them. You can exploit it by including value and momentum in a portfolio, which will have a reduced risk in terms of […]

Market Recap 17/02/2018

USA Financial markets have reacted positively to the talks between China and the US held in Beijing, that next week will move to Washington, with the S&P500 scoring a +2.50% over the week. The Dow Jones and the Nasdaq both increased by 3.09% and 2.05%, respectively. The deadline for the imposing of new tariffs is […]

2019 Macro Outlook: May you live in interesting times

“May you live in interesting times” says a Chinese proverb… Well, 2018 was actually pretty interesting to say the least for markets, with 93% of asset classes posting a negative return in USD terms – this figure is astonishing not only when compared to last year when only 1% of assets recorded negative US$ returns […]

Market Recap 02/12/2018

US Oil production in America continued its rise, hitting home market concerns that a surge in supplies would further put downward pressures on prices. Synchronized global movements have not helped either, as the rise in American oil production is matched by Saudi Arabia and Russia. The growth in supplies also vastly outstrips oil consumption, at […]

Fuelling the Electric Vehicle Revolution: Emerging Commodities

As the automotive industry evolves towards EV’s (electrical vehicles), an analysis of all the new commodities that will be used in the sector, in particular the battery sector, is required. EV batteries are made of an anode and a cathode. The anode is always made up of graphite, while the cathode has several different “formulas” […]

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