Markets

Question 1

risks to global economy over next 12-18 months

Answer 1

monetary policy tightening,
best of US fiscal stimulus behind,
chinese policy stimulus (not risk but we could be putting too much weight on it),
trade relations (US and china),
brexit,
tight labour markets wage inflation (might need policy rises)

Question 2

what are some common ratios that analysts use to compare companies *

Answer 2

price to earnings (P/E),
price-to-cash flow
return on equity (ROE),
return on assets (ROA),
debt-equity ratio,
current ratio,
dividend yield,
earnings per share (EPS)

Question 3

inflation UK, US

Answer 3

UK 1.8%

US 1.5%

Question 4

Interest rate UK, US

Answer 4

UK 0.75%

US 2.5%

Question 5

UK and US 10yr

Answer 5

US 2.39%

UK 1.01

Question 6

why is liquidity falling and why is it an issue

Answer 6

central banks quantitative tightening ,
investors rely on liquidity to perform ‘just in time’ de-risking,
when vanishes, will expose asset managers to issue that they can’t trade out of assets as prices fall

Question 7

what is going on with credit

Answer 7

continued degradation in lending standards and lack of risk premium offered to buyers of corporate bonds,
50% outstanding investment grade credit rated BBB (one above junk),
if ratings based on leverage alone around 45% of investment grade would be below investment grade (junk)