The US midterms are fast approaching, and control of the House and Senate could entail very different paths for borrowing, corporate profits, and bond markets. Earnings season is also about to kick off, with valuations facing heavy scrutiny against expectations of almost 30% year-on-year growth in profits. So why are those selling insurance against stock market turbulence charging the lowest premiums since January, before the war in Iran and $100 oil? Perhaps the distinction

It seems our argument in last week’s post against trying to time the apocalypse did not entirely convince everyone. So, let us ask a simpler question: should we sell when markets look toppy? Sitting safely on the sidelines, letting prices fall and buying back our shares for less sounds wonderful in theory. But what if markets rise? Buying back at a higher price means accepting that we were wrong. The longer markets continue to go up, the more expensive that admission becomes

Maybe it’s the time of year, but we have taken quite a few calls from clients lately asking whether the market is about to crash. They are not alone. Earlier this month, 53% of respondents to a survey by the American Association of Individual Investors expected stocks to fall over the following six months. That is not the same as predicting a crash, but the level of concern is striking. Ironically, there is some comfort in that. Historically, when at least half of respondents

It is becoming easier to argue that China could emerge as one of the main beneficiaries of today’s geopolitical disorder. While Washington is increasingly focused on conflict in the Middle East and tensions elsewhere, China’s export machine continues to power ahead. Its trade surplus is on course to exceed $1 trillion again this year, giving Beijing considerable economic leverage despite persistent problems at home. Which raises an interesting question. If China is an economi

Oil is back above $100 a barrel. That’s not good. Energy feeds into almost everything: transport, manufacturing, food, aviation and household spending. What’s worse is that we know what happens when prices stay this high for too long. They act like a tax on the global economy, pushing inflation higher while simultaneously taking money out of consumers’ pockets. There are essentially three ways this adjusts. The first is more supply. Higher prices encourage producers elsewhere

The summer is nearly over, temperatures are dropping and we have even had a bit of rain in Southeast England, but what to do with these financial markets? It has been a good year for the stock market so far, despite whatever the Trump administration wants to call its activities in the Middle East. The fact is that oil is up and so is inflation, which should keep investors wary for the rest of the year. For bond markets, the battle may already have been lost. Yields are at the

It’s Nvidia week, and the only company that seems to matter in the continuing AI bull run reports earnings on Wednesday. Meanwhile, markets are still trying to digest Treasury Secretary Scott Bessent’s surprise intervention in the bond market, doubling planned buybacks of long-dated Treasuries. The amount itself is relatively small compared with the enormous volume of U.S. Treasuries traded every day, but it certainly caught the attention of investors in bitcoin and gold. Bot

Central banks can do almost anything to short-term interest rates. They can raise them, cut them, buy bonds and, if necessary, force parts of the yield curve to trade where they want. Japan spent decades proving just how far that influence can extend. However, controlling the price of money for the next thirty years is a different matter. And the long end of the curve is becoming increasingly difficult to ignore. The 30-year US Treasury yields more than 5.25%, the highest lev

Amidst all the rhetoric on Iran and yet another swing in the oil price, it’s easy to forget that we are in the middle of earnings season. So far about a third of the S&P 500 has reported and nearly 90% have beaten EPS estimates. Q2 earnings growth is now approaching 47%, the strongest since the post-Covid rebound in 2021. One encouraging feature is that earnings strength isn't confined to AI. Strong reports have also come from financials, energy, communication services and in

As I stood underneath the trees, I couldn't figure out what was causing so much commotion high above me. Hidden beneath the dense canopy, all I could hear were objects striking the ground around me. We assumed it must be birds building nests, dropping the occasional twig in the process. This went on for weeks and, if anything, the activity only intensified. It couldn't possibly be pigeons with such spectacularly bad aim. Then one afternoon I was hit by something rather more s

As the World Cup draws to a close, a welcome distraction from the conflict in the Middle East disappears with it. Commercial shipping through the Strait of Hormuz remains severely depressed, with only four vessels transiting on Sunday and similarly low activity continuing into Monday. Not surprisingly, Brent is creeping relentlessly higher, standing at over $88 per barrel this morning. Rather surprisingly, the S&P 500 still has not got the memo and continues to hover just a c

Back in the nineties, it was relatively easy for professional traders to make money. It was the dawn of direct market access and electronic trading. Stocks would occasionally trade at different prices on different exchanges, allowing traders to buy Lufthansa in Berlin while simultaneously selling it in Frankfurt for a profit. It was, for a while at least, the closest thing to printing money. Of course, those opportunities could not last. They gave rise to high-frequency tradi

The great style rotation appears to be underway again. Over the past week, value stocks have outperformed growth, extending a trend that has characterised much of 2026. After years of being overshadowed by the AI-fuelled rally in mega-cap technology, sectors such as financials, industrials and healthcare have begun to attract renewed investor interest. The drivers behind the recent shift are easier to explain than to predict. Investors have become more confident that economic

Don’t look now, but oil prices have quietly fallen back towards levels seen before the war with Iran began. This is somewhat surprising given that the United States and Iran remain some distance from a comprehensive agreement, and it’s not like Iran’s nuclear ambitions have disappeared, or Israel’s security concerns have vanished overnight. Despite repeated warnings that it could take months for the region to normalise, why do the oil markets appear so remarkably relaxed? For

One of the enduring traditions of modern warfare is that, eventually, everyone claims to be a winner. The latest US-Iran agreement appears to be no exception. Washington can point to military success and the reopening of the Strait of Hormuz. Tehran remains in power and will no doubt portray its survival as a triumph. Israel can argue that it has significantly weakened a long-standing threat. Everyone gets their headline. Whether anyone achieved their original objective is an

With many chip stocks up more than 100% this year, it should not have come as a complete surprise that there would be some profit taking. The bad news is that this was not the reason global equity markets were down 3% on Friday. “Looks like meat is back on the menu, boys!” (The Lord of the Rings, 2002), and the US fixed income markets are once again pricing in the possibility of higher interest rates in the not-so-distant future. It is not like the writing has not been on the

For the fixed income markets, it’s ultimately all about the creditor being able to pay back what is owed. As such, there is a lot we can learn from current gilt yields about investors’ perception of the UK government’s ability to repay the £2.6 trillion it has borrowed. Up until March, things were fine. Short-term yields were headed lower and two-year Gilts were to be had for 3.5%. Now, we are just over 4.5%. More worryingly, 30-year gilt yields are now at a 28-year high of 5

When the Euro Stoxx 50 index launched alongside the Euro in 1999, many doubted either would survive. Yet the index quickly established itself as Europe’s benchmark, and liquidity in the futures market soon rivalled the S&P 500 as a global equity trading instrument. Clearly, the two indices are very different. The S&P500 has ten times the number of constituents and currency moves play a major role in relative performance. Yet the points difference between the two became a surp

Earnings season is doing what it always does: beating expectations. Roughly a third of S&P 500 companies have now reported, with close to 80% delivering earnings ahead of forecasts and around two-thirds beating on revenues. On the surface, that looks reassuring. Markets tend to rise when companies outperform, and so far, the numbers are holding up well enough to justify the resilience in equity indices. The problem is that this is not a story about strength. Earnings growth i

According to the equity markets, the war in Iran is over. Moreover, whatever else we were worried about does not really matter when we are making record highs again. The mega-caps led the way, up an incredible 20% in April, but even staples joined the party on Friday in the kind of broad-based rally you typically see once markets believe the inflexion point has passed. Of course, the problem is that we are far from any agreement that would lead to a true and permanent de-esca