Someone has to say it, and it might as well be me. Markets have a distinct goldilocks feel about them at the moment, or in the words of the FT’s editors; markets are beginning to eye the “immaculate disinflation”, which is a prerequisite for a soft landing. This is a story about two trends; easing inflation and economies which are, well… neither too hot nor too cold. Soft US and UK inflation reports for the month of June have been key catalysts for the change in mood. Headline CPI inflation in the US fell to a two-year low of 3.0%, with core inflation dropping by 0.5pp, to 4.8%, a 20-month low. In the UK, meanwhile, headline inflation slipped to 7.9%, from 8.7% in May, while core inflation dipped by 0.2pp, to 6.9%. These numbers don’t exactly scream goldilocks, but markets trade at the margin of the economic data; it is the direction of travel that matters.
Read MoreIt’s been a while since I discussed markets on Alpha Sources, so I’d thought I resume my coverage by introducing something new; a portfolio tracker. I used to run a page on this site with an occasionally updated PnL table of some of my investments. It was drawn from a home cooked PnL sheet using the API from one of the more famous professional market platforms. I have since lost (regular) access to that service, so it died on the vine, and I have, quite frankly, been too lazy to spin it back up using Google finance or some other open-source resource. But I have recently signed up to Investing.com’s premium service, which, among other things, has a nice portfolio app. It has spurred me on to rebuild a simple PnL model, which I will use in the future, on occasion, to discuss some of my investments, markets more generally and the wider economy. The portfolio I want do highlight today, which I hold in tax free savings account—as opposed to a riskier portfolio in my SIPP pension savings account—looks as follow.
Read MoreLet’s start with the good news. The panic brought on by the failure of Silicon Valley Bank, Signature, and more recently, the shotgun wedding between UBS and Credit Suisse has not produced a financial crisis, at least not yet. The bad news is that it could be the proverbial straw that breaks the camel’s back for economies in North America and Europe. We’ve now likely reached the point that markets pivot from looking at the monthly CPI numbers to a broader set of data to determine their view of the world. Investors will be spending a lot of time in Q2 perusing data on lending, deposit flows, and credit standards for evidence that turmoil in the banking is driving tighter credit conditions, and slower growth in the economy. This then will also invite investors to look beyond inflation in forming their view on, and expectations for, monetary policy.
Read MoreThe big news in the past week in financial markets is the accident report on the demise of Silicon Valley Bank—SIVB—which was put into receivership by US regulators on Friday. This was a very quick death spiral. At the beginning of the week, the stock was trading at a cool 280 bucks, and now my assumption is that the equity is zero. You’ll read many versions of this story this week, but I’ll try to sketch the stuff that everyone seems to to agree on. I will then highlight some of the areas where analysts and commentators disagree, and where there should be scope to make, or lose, money.
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