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By Bilal Hafeez 23-01-2020
In: post | Newsletter

Macro Hive Exclusives: Gold Investment Framework / 4 Facts On UK / Fed’s “Not QE”

(3 min read)
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We are delighted to have our first contribution on gold from commodities expert John Butler. His thought-provoking piece provides a framework to value the precious metal as well deriving an optimal portfolio weighting.

At home in the UK, I look beyond whether the BoE will cut or not and instead look at four overlooked facts about the UK economy. Crucially, the UK has already experienced a productivity shock over the past ten years worse than most hard Brexit scenarios.

Finally, Dominique Dwor-Frecaut, a former NY Fed and Bridgewater economist, reviews how the Fed’s repo operations impact its balance sheet and broader risk markets.





Gold: A Modern Investment Framework For An Ancient Asset (8 min read) Gold no longer serves as an official money in the modern financial system, yet it is still considered an important asset due to its established diversification and store of value properties. But what framework(s) should we use to understand the role that gold should play in investment processes and policies? In Part I of this series, I present one useful framework which implies that gold is significantly ‘under-owned’ and, consequently, undervalued at present…

(John Butler | 23rd January, 2020)



UK Flag


4 Things You Didn’t Know About the UK (3 min read) Climate change worries are increasingly impacting investment mandates. By the end of this year (despite pushback from passive investors), 25% of global assets under management are expected to be covered by restrictions on coal. European asset managers have increasingly applied blanket thermal coal investment exclusions to their portfolios over the past two years (alongside broader and tighter ESG requirements). This went unnoticed at first in several Dutch funds. Then it spread to France…

(Bilal Hafeez | 23rd January, 2020)



How The Fed’s “Not QE” Boosts Risk Markets (3 min read) The Fed is moving to an RP (repo) operational target, which requires a bigger balance sheet. In the context of the ongoing risk rally this is likely to translate into further USD weakening against EMs. Up to the September RP volatility, the Fed balance sheet strategy was aiming for ‘the minimum level of reserves needed to continue operating in a floor system’. This was based on surveys of banks suggesting aggregate minimum reserves need to be around USD900 bn. In November, however, a senior NY Fed official signalled a change of strategy…

(Dominique Dwor-Frecaut | 21st January, 2020)



US Federal Reserve


(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)