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The Mars bar effect

Weekly investor research

14 December 2015

The ‘Mars bar effect’ kicked in extensively in the Quantitative Easing (QE) markets in 2015, which proved unable to produce positive returns despite enormous stimuli ranging from negative interest rates to QE. The US economy is now displaying clear symptoms of ‘late cycle blues’, even before rate hikes have begun. Last week saw an explosion in risk aversion as news began to filter through that a US High Yield fund had to gate. More pain is likely, in our view. Meanwhile, back on Earth the main events included a new FX regime in China, instant accountability in South Africa, a likely default on Ukraine’s Russian USD 3bn bond, a bold program of reforms in Turkey, a boost for the odds of GST in India, Moody’s effort to catch up with the rest of the rating agencies in Brazil, a changing of the guard in Argentina, real power for the opposition in Venezuela and another macroeconomic misstep in Nigeria.

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