The correlation between stock and bond returns is a crucial element of asset allocation decisions. When stocks and bonds move in opposite directions, holding both can help reduce portfolio volatility. When they move together, diversification is less effective. Understanding this correlation helps investors build balanced and resilient portfolios.
November 2023. Despite growing calls for a global shift to clean energy, stocks in the sector are significantly underperforming the broader market. In fact, they're some of the worst performers this year.
November 2023. When Russia invaded Ukraine in February 2022, the reaction from markets was swift. Oil prices jumped from $90 per barrel to over $120 in a matter of weeks. Over the next few months, headline inflation reached decade highs in developed countries, pushing central banks to tighten monetary policy at an unprecedented rate.
On 22 November, the Chancellor will be walking the usual tightrope between delivering as much government spending as possible while preserving the state of the nation’s coffers but the constraints that he faces are unusually challenging.
Our Weekly Market update from our Chief Economist, George Lagarias, said: “Stocks have somewhat corrected, and futures traders have very short positions in bonds. There are now many scenarios in which one (or both) of these asset classes stage a rebound… and we should not write off 2023 just yet. September and October are historically the worst months of the year by far. This means that...
Global equities had a volatile quarter, failing to find much conviction and ending down over -2%, albeit broadly flat in Sterling terms given a newfound weakness in the Pound. Bonds also struggled as interest rate expectations continued to grind higher. Index-linked gilts in particular sold off due to their longer maturity profile. Gold was flat for the period, while the cost of oil crept back...
“Neither a borrower nor a lender be, for loan both loses itself and friend. And borrowing dulls the edge of husbandry”, says Polonius in Hamlet.
After 18 months of uninterrupted interest rate hikes, most central banks in the developed world have reached or are very close to their interest rate peaks.
October 2023. The US yield curve is now back in the spotlight, with a big deal made of “bear steepeners” and “disinversions”. But what exactly do these terms mean, and how will they affect markets?
October 2023. If you have been reading the economic news over the summer months, you may have noticed that the Chinese economy has been a focus of the financial press. The Economist devoted two covers to this issue while the FT and the WSJ dedicate many long columns to the Asian economy.
October 2023. Making investment decisions is sometimes more of an art than a science, and the mere existence of the Efficient Market Hypothesis tells us that trying to predict market movements is, at the very least, notoriously challenging.
October 2023. When it comes to our emotions, we can honestly say that sometimes they make us a bit irrational, meaning we are more likely to make biased decisions.
October 2023. The Efficient Market Hypothesis (EMH) is an investment theory that states that current stock prices reflect all existing available information, making them fairly valued at any given time.
September 2023. Manias in investing have taken many different forms. The Tulip mania is a famous example, while it could be argued that any price paid for some sort of crypto token that is backed by precisely nothing also amounts to a mania.
September 2023. The number of bankruptcy filings is on the rise, and that may be a good thing.
September 2023. Due to the high correlation with wider Asian economies, South Korea’s trade data tends to be one of the most important economic indicators when it comes to trade.
September 2023. Using asset prices to predict the economy seems counterintuitive at first.
September 2023. A ‘common knowledge’ view I find very interesting is that Japanese interest rates have been so low for so long due to low growth, which has largely been attributed to the country’s demographics.
September 2023. When will the Fed pause? This is the million-dollar question.
September 2023. Businesses must adapt to survive. In this article, Investment Analyst Adam Fisher looks at how some of the world’s largest businesses have adapted to become the leaders they are today.
Despite higher interest rates and persistent (though falling) inflation, global equity markets continued to err on the side of optimism as consumer spending remained strong and company earnings were better than expected. Global equities returned over 6.5% during the second quarter of the year, albeit for unhedged UK-based investors this was tempered by a stronger Pound meaning returns closer to...
Every crisis has a response. In their effort to prevent it from happening again, policymakers put in safeguards and provide incentives for the next bull market. In these policies, we should, usually, seek the seeds of the next crisis. From the biggest potential risks, the Private Equity space is where we would focus.
After the fall of the Soviet Union, the world breathed a profound sigh of relief. Humanity had come close to self-annihilation in 1962, when the US and the Soviet Union threatened to deploy their nuclear arsenal on one another, destroying life on the planet in exchange for control of Cuban airspace.
Global investment risks remain elevated as tight monetary conditions and policy uncertainty cause shocks in several markets. We saw a rally in risk assets during Q2, but this rally was largely concentrated in a few US tech stocks, a rebound after a bad year combined with optimism surrounding AI.
The global economy got a welcome and non-inflationary boost from China’s post-Covid reopening early in the year. However, from this point forward, it is poised to slow down. Credit conditions are set to deteriorate, disposable incomes reduced as inflation remains potent and central banks keep reducing the supply of money.
July 2023. Last month, HSBC announced that it would be moving from its iconic tower in Canary Wharf to a smaller building in the city, very close to our Mazars’ office in fact.
July 2023. The first quarter of 2023 started strong for emerging markets. Globally, investors were excited of the prospect of the Chinese consumer returning to a long period of strict lockdowns.
July 2023. While inflation remains stubbornly high in the UK, it is showing clear signs of easing in the US and Europe.
July 2023. With the popularity of electric vehicles and other cleaner technologies on the rise, the demand for oil is set to slow over the next decade.
June 2023. The last nine months have seen two widely publicised crises with something in common. The first, the liability driven investment (LDI) crisis which saw the Bank of England intervene to prevent the collapse of pension funds, the second the collapse of Silicon Valley Bank, which was forced to sell down its investments at a loss to meet deposit withdrawals.
June 2023. As markets celebrate Congress’ decision not to self-immolate, investors reflect on how low the bar for rational behaviour by policymakers is, and whether risk premiums echo the present political and geopolitical tectonic shifts.
June 2023. It all started with an energy crisis. Swathes of European factories were forced to limit production as rampant energy costs hampered their business models. But is this a one-off or has this initiated a long-term industry exodus as manufacturing industries in foreign nations become increasingly competitive?
June 2023. Post-Brexit London has lost some of its curb appeal, with many now preferring the likes of Amsterdam and Paris to base their headquarters. However, recently a large bulk of asset transfers has been completed. At the same time, relations between the UK and the EU seem to be improving, creating an easier path for post-Brexit financial services exports.
May 2023. Crises in financial markets are mostly unpredictable and the result of a misunderstanding of risks and genuine mistakes. We could however be headed for a major crisis which is completely avoidable, save for the deep political polarisation in the US and some of the arcane laws in place regarding how much debt the country has outstanding.
May 2023. The 60/40 portfolio consists of 60% equities and 40% bonds. Equities provide capital appreciation but with volatility. Bonds provide lower, predictable returns and are less volatile. In fact, the equity/bond split is then adjusted for individuals’ risk tolerance, but the term 60/40 portfolio is a catch-all which represents all diversified portfolios. This bond equity split has...
May 2023. A potential US recession has been a topic of heated debate among investors. But exactly which recession indicators are the most reliable?
May 2023. In Pirates of the Caribbean, Jack Sparrow often trades in, or searches for, treasure in the form of pieces of eight. Pieces of eight were introduced in popular pirate lore by Robert Lewis Stevenson’s Treasure Island.
May 2023. The world of finance has three traditional asset classes: Bonds, stocks and commodities. The market for the latter has always been the smallest, as they usually trade in forward or futures contracts.
May 2023. Rising UK inflation is a result of global supply chain disruptions. However, as supply pressures and price hikes ease elsewhere, UK numbers still seem stubbornly resilient. One of the reasons is the labour market, which is much tighter in the UK. The question is: When will UK inflation drop?
May 2023. For the fourth year in a row, we are faced with great uncertainty and a wide variety of outcomes.
May 2023. To date, our theme for 2023 is that the world is a volatile and unpredictable place. This could have been our theme every year since 2006 and we would have still hit the mark. But this is not garden-variety volatility. Underlying everything are two themes. A geopolitical shift away from the post-soviet unipolar world, and the war against all that is not sustainable.
May 2023. Despite the potential for new technologies to disrupt industries and livelihoods, they could also be the key to unlocking the productivity growth we need to boost income and living standards.
May 2023. The Apple Card, a joint venture between Apple and Goldman Sachs, now offers a savings account delivering an attractive interest rate of 4.15%. But is this the beginning of a revolution in banking, or simply an ill-fated attempt by Apple to diversify its revenue base?
May 2023. Five Eastern European nations recently announced bans on grain and other food imports from Ukraine, citing their desire to protect their respective agricultural sectors.
April 2023. Smaller banks are still feeling the pressure, while bigger banks feel safer. The alarm bells are off, for now. But investors should not be relaxed about building risks.
Join our Chief Economist and Chief Investment Officer for an upcoming live webinar and Q&A session where they will discuss the global economy, markets and the investment landscape.
Webinar details
 | George Lagarias George is Mazars’ Chief Economist and has almost 20 years’ experience in financial markets as an analyst, investment strategist, economist, and fund manager. George is a firm believer that investments should be client-centric and that ideas and perceptions should be placed at a public forum open to all stakeholders. Having joined Mazars in 2016 George has previously worked for British asset managers EFG and Close Brothers as well as Greek private banks Alpha Bank and Eurobank and wealth manager Marfin. George is certified by the Chartered Financial Analyst (CFA) institute with the Investment Management Certificate (Level 4). |
 | David Baker David is Chief Investment Officer and Head of Investments in the UK. David has over 20 years’ experience advising on and managing investment portfolios for a wide variety of clients including private clients, charities, corporates and pension funds. David also works with professional negligence lawyers providing expert witness services, and with regulated firms who are subject to skilled person reviews. In addition, David provides a wide range of investment advisory services to charities and other not-for-profit organisations. David is both a Certified and Chartered Financial Planner and a member of the Chartered Institute for Securities & Investment and the Chartered Insurance Institute. He is Chair of Trustees of a defined benefit pension scheme, and a trustee of an educational charity. David is a passionate believer that private client advice is most effective when financial planning, tax and investment advice is considered in unison. |
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