James Malthus, Macro Analyst

Macroeconomic analysis should be forward-looking, but trying to anticipate policy changes based on the Fed’s projections has been a losing strategy.

With monetary policy a huge driver of investment performance, all investors need to be fluent in “Fedspeak.”

The Fed’s balance sheet has increased massively in the last five years due to the unconventional policies it has implemented.

High-yield debt could do well, but there are risks. The Fed shifting toward more contractionary monetary policy poses two risks to high-yield debt.

With inflation at 1.3%, the Riksbank is still below its 2% target. Even so, the bank appears to be concerned with housing prices in Sweden.

High yield bonds could be a strong performer over the next year, but you need to understand them before you invest.

Retail sales growth was positive in September. But the rally in Spanish stocks has been sentiment-driven, which poses unique risks.

With the taper pushed off until 2014, bond funds might be a good intermediate play. Interest rates are still historically low, so investing in bonds is risky long-term.

The FOMC is made up of hawks and doves, and their balance could affect future policy. Investors who follow the Fed need be able to tell the differences.

The main indicators that drive Fed policy are the unemployment rate, the participation rate, and core CPI (consumer price index).

Is Spain approaching a bottom in growth? Equities, like all assets, are priced off of future expectations. This concept can be difficult to understand when a stock price jumps after a company reports losses or when Apple stock craters after reporting record profits. In the case of Spain, real GDP growth (the increase in output […]

When will the consumer come back to Spain? Consumer confidence is an important indicator to follow, as it measures the pulse of an important driver of the economy, the end consumers whose demand creates businesses. As with other economic indicators discussed in this series, it’s not so much the level of an indicator that’s important […]

Southern Europe and US equities When researching southern Europe as an investment opportunity, a useful story to compare recent performance to is US equities in 2009 and 2010. Although the US economy had not yet bottomed, stocks were soaring to historical returns. The thing to keep in mind is that equities trade based off future […]

The Spanish recovery continues to be heavily exports-based, and will likely remain this way as nominal wages continue to fall and the housing market bottoms.

While the US slows and eventually stops QE (quantitative easing), Japan will continue and likely increase QE In Part 1 of this series, I made the case that the BoJ (Bank of Japan) will likely step up its monetary easing, as current efforts haven’t led to the level of inflation it’s targeting. At the same […]

No surprises from the Bank of Japan (of BofJ), but investors should look beyond the rhetoric As expected, the Bank of Japan kept its “Abenomics” policy unchanged at its most recent meeting. The monetary base will continue to increase via purchases of Japanese Government Bonds (or JGBs) until the BoJ reaches its inflation target of […]

The ECB kept their benchmark interest rate unchanged at 0.5% today. As with all central bank announcements, investors were focused on the nuances of ECB President Mario Draghi’s prepared remarks at a press conference held in Paris, in order to find any hint about future policy. Draghi’s tone on the economy was optimistic, so further […]

Spanish stocks have been the clear winner lately. In this series, I’ll walk through the country’s economic data to investigate the drivers of this outperformance.

U.S. stocks (SPY) have been on a great run this year, and whether or not the rally continues is in the Fed’s hands.

The continuing economic recovery led spreads (the difference between corporate yields and Treasury yields) on bonds to tighten in November.