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Restrictive policy and geopolitical risks raise the odds of a global recession What a difference a year makes. 2022 saw the ‘reopening’ of markets from the COVID pandemic evolve into a ‘recession’. Margaret Thatcher put it succinctly on 27 February 1981 – “The lesson is clear. Inflation devalues us all.” Monetary policy has been on the most pronounced tightening...

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2022 continues to prove difficult for investors around the globe. The conjunction of heightened geopolitical risks, increasingly hawkish central banks, and runaway inflation has forced many investors to change tack and modify their asset allocation significantly over the last 12 months. Duration has been lowered across asset classes, and a survey we commissioned1...

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This week the UK economy posted its highest inflation reading in 41 years rising 11.1% year on year (yoy) in October. The recent jump is largely the result of the uprating of the household energy price cap in October. Core inflation moved sideways at 6.5% yoy. We expect this to represent the peak for UK inflation. As the base effects of high energy prices begin to...

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The Ethereum network expanded the Bitcoin-conceived idea of a decentralised blockchain and added new functionality to the blockchain. It introduced programmable applications and smart contracts that would automate decisions and transactions. Smart contracts are self-executing pieces of code that create conditions for a certain action to take place. This means that...

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The clock is ticking for Europe to shield its economy amidst the current energy crisis. The cost of electricity across the European bloc is nearly 10 times the 10-year average in response to Russia cutting back natural gas supplies in retaliation to sanctions1. There has been a substantial increase in the share of supply of Liquidifies Natural Gas (LNG) and...

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Industrial metals prices are traditionally cyclical Industrial metals have historically been cyclical. In this current downturn, we are finding that metal prices are suffering, as they have done in the past. However, the importance of base metals in delivering the energy transition has never been greater. We are currently living in an energy crisis exacerbated...

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In the classic 1980s film, ‘Back to the Future’, the protagonists, Dr. Emmett Brown and Marty McFly, travel 30 years into the future. In the year 2015, their DeLorean time machine, which now runs on waste matter, is airborne in what appears to be heavy car traffic in the skies. Although our skies don’t quite look like what was envisioned in the movie, ‘Back to...

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More and more metal smelters are falling victim to the European energy crisis. Last week, Nyrstar, a large European zinc smelter, announced it would shutter production at its Dutch Budel facility from 1 September 2022 and Norsk Hydro, a significant aluminium producer in Norway, said it will close its Slovakian smelter around the same time. Aluminium is one of the...

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Recent news of potential attacks on wallet applications built on the Solana ecosystem, resulting in lost funds, has once again highlighted the long-running problems around the difficulties in securing hot wallets1. As a reminder, "hot wallets" involve storing private keys used to sign digital assets transactions, on a computer or phone connected to the internet....

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Governments are competing with each other to ensure stable future supplies The phrase ‘chip shortage’ has made quite an impression1. - The US has earmarked an enormous one-time sum, $77 billion, in subsidies and tax credits to boost chip production within the US - China is prepared to spend more than $150 billion through 2030 - South Korea is poised to offer...

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When it comes to batteries, automobiles have stolen the lion’s share of our attention. From there, people may naturally think about our smaller devices that also use batteries. The idea of large ships or planes being powered by batteries—many of us would have a natural intuition that there could be obstacles to widescale usage. Maritime shipping: lots of...

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Cotton prices have been very volatile in 2022. The three-month implied volatility on cotton is currently at 43.7% fast approaching the levels last seen in 2011. A pickup in volatility has historically been an important indicator of a change in trend. Back in 2011, Texas (the biggest growing cotton state in the US) witnessed the driest year on record. The reason...

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Sharply rising energy prices are pressuring politicians to react. Last week the European Commission called for an overhaul of the electricity market following price increases in excess of 20% in a single day in France. The European Commission is talking tough but is offering very little in terms of detail on its proposals1. Poland is looking for a suspension of...

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When you think about cloud computing companies this year, the most likely starting point will be performance1: - The BVP Nasdaq Emerging Cloud Index, from its high last November to its near-term low in June, fell 60.20%. - This compares to the S&P 500 and Nasdaq 100 Indices, down 21.21% and 31.17% respectively, over the same period2. However, from June 16th to...

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2022 has been a year where we have heard different applications of artificial intelligence continually increasing different types of capabilities: - Large-language-models, exemplified by GPT-31, have become larger and have pointed their capabilities toward more and more areas, like computer programming languages. - DeepMind further expanded its AlphaFold toolkit,...

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2020 and 2021 saw investors putting record amounts of investments into thematic funds. Whilst no two thematic funds are the same, two things in particular were noticeable: 1. Strategies focused on software were able to showcase very strong revenue growth metrics, in many cases providing solutions that were more broadly used during the Covid-19 lockdown periods....

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Despite living in a period of elevated inflation for the past 18 months, gold has failed to reach the highs of summer 2020. In fact, gold has largely been falling since March 2022, when it briefly rose above $2000/oz1. A strong US Dollar and a bond sell-off have put gold under pressure. The US Dollar basket (DXY) reached a 20-year high in July 2022, and we have...

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Markets in Q2 2022 continued to suffer from entrenched inflation and aggressive rate hikes from central banks. They also reacted to the slowdown of the global economy and the increased risk of a recession in developed economies. These changing market conditions impacted equity factors differently. In this instalment of the WisdomTree Quarterly Equity Factor...