Mira ABM Risk Severity (February 2019)
Scenario: Germany Industrial Crisis
The recent fall in the industrial production in Germany appears to be larger than typical quarterly volatility. Year-on-year change was -4.8% in November 2018 – the greatest decline since 2009 (source: Bloomberg). Source: Bloomberg A more detailed analysis of the business sentiment - IFO index (source: IFO Institute, Center for Economic Studies) suggests that while
Risk Wire: China – The Threat of Unchecked Leverage
In the six years since LINKS first covered risks of excessive leverage in the Chinese economy, both understanding of and dealing with leverage has been a key focus for the government of China. Despite this focus and even though the debt is domestically funded, the results of deleveraging are less than encouraging. Sustainability of
Risk Wire: The Fragile Exposure to Technology
Much has been discussed about the technology sector concentration of S&P 500. Although we find that the degree of concentration is not unusual, once certain myths about the largest companies are dispelled, the nature of exposure and corresponding end-market risks indicate a degree of fragility. The concentration of the US stock market performance in
LINKS Adviser Partner Program
Build your independent advisory business with the assistance and resources required to succeed. The world is moving away from fixed employment. The regimented hierarchical corporate structures just can’t cope with the pace of change. Unfortunately, building independent advisory practice from scratch is not easy: one has to build a product, a network and market,
Risk Wire: Do Inflationary Concerns Warrant Hedging?
Some sources of inflationary risk are more benign than others. Given the structural headwinds that the global economy faces, a broad inflation hedging programme can be expensive and unnecessary. On the other hand, the likelihood of unexpected inflation driven by regulation or supply shocks is increasing. This points to a more targeted approach when
Impact of New Steel and Aluminium Tariffs Imposed in the US
On February 2, 2018 the US administration announced a new set of tariffs to be applied on imports of steel and aluminium. The tariffs of 25% and 10% respectively will disproportionately affect US' closest ally and trading partner - Canada. The other countries have relatively manageable exposure to the US imports (see the table
Investing in the Age of Disruption
The emerging disruptive forces of technological, political and demographic change threaten to destabilise long-term investment performance. It will take special kind of capacity building and flexibility for institutional investors to benefit from disruption rather than fall prey of it. We live in an age of unprecedented confluence of multiple disruptions. First, there is a generation
Risk Scenarios 2018
What Could Possibly Go Wrong? It is not easy to build plausible yet severe economic scenarios. Doubly so, if those scenarios are assessed in LINKS Mira Agent Based Model (ABM). Unlike conventional models, Mira ABM takes into account unintended consequences of events – both positive and negative. Just like in real life, positive and negative