Back to the soft landing

The latest BoA Global Manager Survey is a dramatic illustration of market anxiety. In July, 18% of respondents believed that a U.S. recession was the biggest tail risk. That figure surged to 39% in the August survey, which was taken August 2–8 right at the height of the market panic.     During the market...

What will lead the anticipated market rebound?

Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade.   The Trend...

Assessing the damage: Not just the carry trade

After strengthening rapidly, the Japanese Yen (bottom panel) has stabilized has stabilized in the 140-150 range. The 10-year Treasury-JGB spread also stabilized and found support. So did the Nikkei Average after suffering the greatest one-day decline since the Crash of 1987. The Bank of Japan sounded a dovish tone when deputy governor Shinichi Uchida said...

Why the market panic may not be over

Mid-week market update: Is the worst of the Japanese risk-off episode over? The Nikkei formed a bullish harami pattern when it recovered on Tuesday, but the recovery candle formed an "inside day" compared to Monday's massive downdraft. As well, BOJ deputy governor Governor Shinichi Uchida calmed markets and struck a dovish tone when he said...