Our Perspective.
As we write this the announcement came in that JP Morgan will acquire First Republic Bank, in what is the second biggest bank failure in U.S. history. Unprecedented levels of debt, the reach for yield during a decade of ZIRP, and a historically fast pace in the increase in interest rates are starting to show who’s possibly been swimming naked. As the tide of easy money goes out, the question everyone’s asking is who’ll be found to have been swimming without any clothes on?
We remain of the view that the cost-of-living crisis, the boom-and-bust of crypto-mania and the failure of now four US regional banks, are all either direct or indirect outcomes of fiscal and monetary policies over the last decade. Furthermore, halfway through Q1 earnings season, and corporate profits continue to slow as higher prices and rising cost of capital is putting pressure on corporate margins. Financial conditions have tightened sufficiently to turn the policy-induced post-pandemic boom into a deflationary bust; we currently see a 55% probability of a ‘deflationary bust’ in our factor quadrant.
Whilst inflation continues to slow, it’s perhaps not slowing quick enough to bring about a change of course from central banks. This is how economic downturns start: forcing solutions to latent problems from the past.
To continue reading… please download the PDF below to access and read the full article.
Disclaimer:
We try to ensure that the information provided is correct, but we do not give any express or implied warranty as to its accuracy. We do not accept any liability for errors or omissions. The content of this brochure is for guidance purposes only and does not constitute financial or professional advice.
This document has been prepared and issued by Shard Capital (Jersey) Limited (“Shard Capital”). Shard Capital is a limited company (reference no. 130205) with its registered office at 3rd Floor, 5 Anley Street, St Helier, Jersey JE2 3QE. Shard Capital is authorised and regulated by the Jersey Financial Services Commission for Investment Business under the Financial Services (Jersey) Law 1998.
*Source:
Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Bloomberg does not approve or endorse this material or guarantee the accuracy or completeness of any information herein, nor does Bloomberg make any warranty, express or implied, as to the results to be obtained therefrom, and, to the maximum extent allowed by law, Bloomberg shall not have any liability or responsibility for injury or damages arising in connection therewith.
IMPORTANT INFORMATION
Shard Capital (Jersey) Limited is an associated company of Shard Capital Partners LLP, a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office: 36-38 Cornhill, London, EC3V 3NG. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.
This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.
Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.
The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.
No liability is accepted whatsoever by (the company) or its employees and associated companies for any direct or consequential loss arising from this document.
