US: Building a Better Mortgage Market for All Americans

August 17, 2016

JAPAN REDEFINING INFLATION

The Challenge

A Japan desk within a long-short fund is looking for insight into Japanese economic policymaking, particularly how the Bank of Japan views progress towards its long-held “2% inflation target.”  The fund wants to better understand PM Abe & the BoJ’s evolving thinking on the matter to ensure the best positioning for its current holdings - debt and equities.

The Outcome

Utilizing long established contacts within political circles in Japan, we determined that the PM, with the backing of the BoJ, was preparing to break from his traditional talking points and publicly redefine what “inflation success” entails. Instead of focusing narrowly on the 2% inflation target, made impossible in the short run because of (beneficial) energy deflation, we explained that PM Abe would soon redefine success as wage inflation outpacing broader inflation.

The Impact

While the BoJ can stimulate anytime it fears weakness in the economy, the real importance from this intelligence was that it changed the way it views that weakness.  Under this new rhetorical formula, Abe was able to steal back the economic narrative and the Nikkei accelerated to its fastest pace in over a year.  The client buys long on Japan equities.

Japan: Celebrating Inflation In A Deflationary Environment

February 18, 2015

GREECE: TRADING THE CRISIS

The Challenge

A credit desk is interested in investing in Greek debt prior to the upcoming presidential elections, and wants to get a specific understanding of the political risk associated with the outcome, its potential impact with the Troika, and a view of the general elections if needed.

The Outcome

Sources close to Tsipras confirm that he wants a deal but will push the EU to the deadline to get the best leverage.  PA also advises the client that while a deal is likely, capital controls remain the most likely risk to occur, and will force Tsipras to finalize a deal.  

The Impact

Greece eventually implements capital controls and Tsipras ultimately accepts a harsh deal from its creditors. The fund buys sovereign debt while the crisis and uncertainty peak, while also shorting the Greek banks.

Greece: Exploring the Conditions for Capital Controls

February 18, 2015

 

Greece: The Ultimatum

May 29, 2015