Our flagship product, called Synopsis, is published every two weeks. It uses the data generated by our process to address whatever we think are the most important issues in global investing at the time.
All our notes are tagged thematically, so feel free to click on any of the topics and explore what we have written.
Under UK regulations, our research is only available to professional clients and eligible counterparties; they are not available to retail (investment) clients. Harlyn Research is not registered as an investment advisor with the SEC and therefore any information about our investment products or services is not directed at nor intended for US investors.
A Warning from History
Wednesday, June 7th, 2017High exposure to Euro Equities can be dangerous
There is a lot of concern that the ultra-low level of volatility may herald the death of the global equity bull market. But historically this has been a poor indicator (as have Tech bubbles). Two which have worked in the past are very low exposure to US investment grade credit and very high exposure to Eurozone Equities, both of which we have now. But the lead-time from here could be between 10-30 weeks.
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Bubble Territory: Official
Wednesday, May 31st, 2017Worry about Chinese – not US – Tech
According to our metrics, the US Tech sector entered bubble territory two weeks ago. The only times it has had a higher score were in 1999 and 2000. But Tech bubbles can deflate gently, as was the case after September 2014. We are actually more concerned about the frenetic switch out of US Value into US Growth, and the runaway performance of the Chinese Tech sector over the last five years.
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Comforting Conclusion
Wednesday, May 24th, 2017Low volatility not always followed by an explosion
We are now very close to the all-time low on our index of multi-asset volatility, but setting a new record is not really important. What matters is how quickly we revert to the median and what leads us higher. Previous episodes suggest that the reversion takes 8-10 months and is led by US High Yield and US REITs. The numbers also suggest that global equities could correct by 10-15% without significantly damaging investor psychology.
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Peak Euphoria
Thursday, May 18th, 2017Macron trade already stronger than Trump trade
Our portfolio has had Eurozone Equities as its #1 position since the middle of March. We now see evidence of indiscriminate buying, with investors scrambling for exposure to the benchmark and not caring about sector or country tilts. Our exposure is now at a level which has only been matched three times by any equity region since the onset of QE.
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Prices Move Before News
Wednesday, May 10th, 2017Our focus has switched from Europe to China
Newspapers like to argue that events are unforecastable, which is why you need to pay for access to news. We agree that forecasts don’t really work, but we don’t think news does either. We think that prices move before news. Very often the change in price is the news.
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Bi-Modality
Thursday, May 4th, 2017US volatility has a split personality
The frequency distribution of realised volatility for US equities is bi-modal, which suggests there are two overlapping risk-regimes, rather than one continuous one. This would make the US different from the rest of the world and increase the potential for a non-linear market response to an incremental policy action by the Fed.
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The Missing Piece of Chewing Gum
Wednesday, April 26th, 2017No clear signals out of China
We don’t have the killer chart that says China is going to blow up or shoot the lights out. Our models are curiously inconclusive, which is unusual for China, and the underlying data are trading in a very narrow range. All of which makes us nervous.
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Systematic Diversification
Wednesday, April 12th, 2017A stylistic guide to international equities
What’s the best way of allocating an equity portfolio between the equity indices of the US and another country? We use nine different styles to discover the best regime for each individual country over the last 21 years. Sometimes the quest is hopeless; there is no way of beating the US by diversifying into any Eurozone country. But for the rest of the world, there is nearly always a process which has worked.
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Di-Worse-ification
Wednesday, April 5th, 2017US buys the Eurozone for a trade, not forever.
Everybody seems to be increasing their exposure to Eurozone Equities at the same time. We agree with the trade but are cautious about some of the commentary. Eurozone investors need US equities to construct risk-efficient portfolios, but US investors do not need Eurozone equities in the same way. They do, however, need Emerging Markets.
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