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Mike Lenhoff archive
Mike is Chief Strategist and Head of Research
at Brewin Dolphin Securities.
Graduating with a PHD in economics from the London School of Economics, Mike Lenhoff started his career path in an economics forecasting consultancy business before joining the City. In 2002 he joined Brewin Dolphin as Chief Strategist and Head of Research. Making frequent contributions to the financial press and regular guest appearances on CNBC and Bloomberg, Mike is the prime mover of the Group’s macro economic forecasting and its financial markets analysis.
And now the recession – that equity markets are discounting.
In less than a month, probably from around the time when Lehman Brothers filed for chapter 11, the character of the credit crisis has changed dramatically. Not only has its chemistry become more pernicious than before but there is also a sense in which its course has been moving to the point of a climax. Date of publication 10/10/2008 14:00 Welcome to Frantic - or Freaky - FridayAre happy days here again? The ban by the Financial Services Authority on the short selling of Financials is a welcome short term measure. Date of publication 19/09/2008 17:08 Lower gilt yields should help high yielding UK equitiesWhat was significant about this week’s UK inflation figures, which were higher than expected, was the response of the gilt market. Yields all round continued to fall. Index-linked have now recovered all the ground they lost last month and conventionals are continuing to rebound. Date of publication 15/08/2008 11:05 A boost for ‘high yielders’ in the UK equity market.In the UK, index-linked government stocks have been one of the best performing asset classes over the past year. This is not just in relative terms but also in absolute terms as the chart shows. Date of publication 06/08/2008 12:55 A catalyst that could boost equity marketsAs a colleague likes to put it, the cascading sequence of lower highs and lower lows shown in the chart of the FTSE 100 ex resources is as good a way as any of visualizing what it means to be in a bear market. Date of publication 18/07/2008 15:56 High yielders for value investors
It says a lot about the beast out there when equity markets can’t find the wherewithal to sustain a rally from a technically oversold condition, particularly an extreme oversold condition, such as that for the UK equity market. We’ll come back to that another time. Date of publication 18/07/2008 15:20 Revising down my year-end FTSE 100 forecastHaving gone below their mid-March lows, the major equity markets are, with the exception of Japan, deeply oversold. The chart illustrates the point for the UK equity market and shows that the oversold condition is more extreme than ever. Date of publication 09/07/2008 15:20 Equity Markets Gain as Flight to Quality Abates!The chart shows the yield spread on below investment grade US corporate debt (solid line) as well as the ratio (dotted line) of upgrades to downgrades in the consensus earnings estimates for the S&P 500 - in this case, the 12-month forward earnings estimates. Date of publication 28/04/2008 11:55 UK Equities Challenge Key Resistance!Two countervailing forces weigh on the global economy. One, originating in the developed world, is the disinflationary impact of the credit crisis. Date of publication 04/03/2008 11:42 Better to Have Travelled than Arrived?Does the Fed know something the markets don’t? Like maybe there isn’t the urgency, reflected by the bond markets, to cut rates. Date of publication 18/12/2007 17:06 More Value in Equities than Bonds
In pushing for a rate cut it is looking like the bond market will get its way and that the Fed will cut the Funds rate by at least a quarter point at the next FOMC meeting. Date of publication 30/11/2007 16:42 Time for Insurance – No Time for Big Bets!In thinking about the momentum behind the bull market that started over four and a half years ago, the strength of corporate earnings is one feature, among others, that has stood out. Date of publication 12/11/2007 15:55 Double or Quits!
When it comes to investing in equities, anyone who doubles their money in a four and half year span is doing well. As the chart shows, FTSE’s All-World Developed Markets Index has doubled in value since the Spring of 2003. Date of publication 29/10/2007 16:31 Earnings May Disappoint but the Fed Won’t!For the first time in a long while corporate earnings in the US are coming in well below expectations. This is probably a harbinger of what lies in store elsewhere. Date of publication 26/10/2007 13:08 Action Speaks Louder Than Words! So What Now?
By standing fully behind the decision to cut half a point off the Funds rate - the decision was unanimous - the FOMC has sent main street, Wall Street and the markets generally a clear and forceful message that it is prepared, indeed determined, to help stabilize the economy and that by doing so, it is doing no more, no less, than fulfilling the role expected of it.Date of publication 20/09/2007 13:11 Momentum, Excesses, Greed and Fear!To think of equity markets as having been liquidity driven these past four, going on five, years, is to downplay the fundamentals and to leave behind two distinct and not necessarily correct impressions: first, that a liquidity driven market inevitably creates excesses and second, that a bull market ends when liquidity becomes less readily available. Date of publication 07/08/2007 15:02 It’s All About Earnings and Valuations but Mostly About Interest Rates! If it's not one thing, it's something else, and there's always a crisis. That’s the wall of worry that bull markets climb. The crisis, or crisis in the making, may be US subprime related, but in the end, or at the start, depending on where one’s picking up on the story, it's all about something fundamental - like interest rates. Date of publication 17/07/2007 00:00 Bond market vigilantes – they’re back! Yikes - just look at that chart! Although the central banks have not made a big deal of rising commodity prices - apart from their reference to the increase in the cost of energy - it’s no wonder they are worried that ‘inflation will fail to moderate as expected’, to quote the Fed. Date of publication 02/07/2007 00:00 The Risk is Being Out of Equity Markets - Not in Them! Who’s worried about the Chinese stock market - aside the former Fed Chairman, that is? The Chinese authorities are. But is the Chinese punter? Probably not! We’ll come to that in a moment. Date of publication 31/05/2007 00:00 Triumph for Equity Markets!When the Dow went through 12000 last October, the move was slightly downplayed. Thirty big international stocks going through some arbitrary level? So what’s the big deal? Date of publication 27/04/2007 18:40 Stagflation's Not Back! The Cycle's Back! Stagflation, that uneasy combination of high inflation and slow growth, is not back as we knew it, neither in substance nor even in degree. Date of publication 20/04/2007 00:00 There's more to volatility than angst! Volatility creates angst. It stirs up talk about the re-pricing of risk. The VIX gets lots of attention and there’s plenty of reference to the quality spreads at the less liquid end of the corporate bond markets. Date of publication 20/02/2007 00:00 Equity Markets Get More 'Welly'!
It’s a whole new ball game. Or at least it feels that way as the FTSE 100 climbs to a high not seen since the latter stages of 2000. Date of publication 12/02/2007 00:00 Knock, Knock … Hello … Is Anyone There? Rising bond yields and earnings downgrades are an unwelcome combination for equity markets, or so we thought. But who’s bothered? Date of publication 26/01/2007 00:00 On the Back Foot or on the Wrong Foot?We shall find out soon enough the rationale for yesterday’s surprise move on base rates. The equity market responded defiantly, though Wall Street helped, thus putting those, like ourselves, who are a little cautious, on the back foot.Date of publication 15/01/2007 00:00 Mid Caps and Small Caps Steal the March! One of the enduring features of the four-year bull market has been the outperformance globally of the second liners and the small caps. Date of publication 03/01/2007 00:00 Downbeat, Upbeat or Off Beat - the UK Equity Market in 2007!
As the chart shows, headline inflation in the UK is above target and rising. That is despite sterling’s strength, which ought to be disinflationary and which ought ultimately to limit the scope for higher interest rates. Date of publication 15/11/2006 00:00 On the Funds Rate and the S&P 500 for 2007!
We no longer feel that the Fed will cut the Funds rate next year (see 2007 – A year of Grinding Onwards! 7 December 2006) and here are the reasons. Date of publication 12/11/2006 00:00
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