Beyond general information of the Funds, the portfolio reports offer a strategic overview on the latest performance.

The recession isn’t over, just (possibly) about to turn w-shaped

The various market analysis firms are publishing their opinions thick and fast, to the effect that we are now very close to the end of the global recession. Equity market analysts, often rushing to ‘outbid’ each other, have begun to raise their forecasts for corporate profits, which (looking at just the numbers) really is good news, as this is something that we have only been able to dream of since April 2007. The buoyant predictions are partly due to the fact that 75% of companies that have posted results so far in this flash reporting season published figures more favourable than the analysts’ consensus. So it comes as no surprise most of them have raised their year-end target for the S&P 500 index to around 1050 points, from its previous value of 900. Many base their predictions of an end to the bear market on the likelihood that the macroeconomic picture could improve in the second half of the year, as companies rebuild their inventories and the real-estate market stabilises. Certainly, appetites for risk and investor confidence indices are returning to normal levels, and based on their P/E levels many of the equities markets can be regarded as inexpensive (although many others, having risen unbelievably since the beginning of the rally, are downright pricey), and due to the low inflation there is no reason to fear a tightening of monetary policy.

[…]

Download the whole outlook here:

“The National Bank of Hungary (NBH) has a massive portfolio of two-week bonds. The funds need to be channelled out of these at long last”, goes the policy proposal I have been hearing from a number of experienced, old hands. By who? Where to? Why?

It is true that the volume of NBH two-week bonds, which serves as a sort of forint-based “sterilised intervention” portfolio in the Hungarian money market, has grown explosively over the recent period. The reason for this is similar to the justification for crawling-peg devaluation way back when: we are witnessing a net influx of capital as the IMF loans are being drawn down at a rate that far exceeds the extent by which other sources of FDI have slowed, essentially as a pre-emptive response to the fact that private capital influx will remain sporadic for a while. The NBH, just as it did 10 years ago, is engaging in a form of sterilised intervention by converting the IMF assistance (foreign currency) into forint, in other words using it to increase reserves, and the forints thus “created” are unavoidably leading to growth in the central bank’s liabilities.

[…]

Download the whole analysis here: