Opinion

It is striking how bad economists are at predicting a recession. They have shouted so many times now that a recession is coming, that they have just dug in and knowingly stuck to this tunnel vision.

The implementation of the AIFMD, the European directive for alternative investment funds managers, in 2011 can be seen as the starting point for the transition to a greater degree of specialisation. The requirements in this directive have increased the cost of obtaining an AIFM licence to a point such that a licence often no longer is viable for smaller fund boutiques. As a result, the use of ManCos has become even more popular for tangible assets such as real estate.

There has been a clear shift from public markets to private markets. Private markets are no longer an opportunistic satellite, but are now the core of the investment portfolio. 

The workings of financial markets never cease to amaze from time to time. Especially when they decide to systematically deny the elephant in the room. Equity investors are often blamed for this behaviour, but high-yield investors can also have some of it at the moment. 

If there is anything consensus after the demise of Silicon Valley Bank, it is surely that the outflow of bank deposits is leading to tighter lending requirements. Not least because loan-to-deposit ratios have increased.

It was when the Netherlands, Belgium and Luxembourg signed the customs union that a geographical area at the heart of Europe was defined. The aim was to promote economic integration and cooperation between the three member states. 

Since then, Benelux has been one of the most successful regional integration models, both in terms of economic growth and political stability. This success is also rooted in the creation of a solid legal framework that provides a stable and transparent business environment.

This week, the European Central Bank published its ‘Monetary developments in the euro area’ report. And with that, we finally got information on bank deposits in the euro area.

European deposits look a lot better on an aggregate level than in America. Unlike in the United States, where bank deposits are down 3 per cent from a year ago, Eurozone deposits are still growing. That means the risks of traditional bank runs are lower here.

As Investment Officer knowledge partner, Universal-Investment’s Luxembourg country head Sofia Harrschar argues that reforming the EU regulation on social security would be in the interest of Luxembourg’s financial services sector and the many thousands that it employs. The industry meanwhile, needs to adapt quickly, look across the border and develop new ways of working.

The Federal Reserve still raised interest rates by 25 basis points despite the banking woes. But not because it has high confidence that all will be well. Moreover, by not pausing once, it has again misled the market.

The Commission de Surveillance du Secteur Financier (CSSF) is working relentlessly to further build a financial system that is safe, transparent, and reliable. To achieve this goal, the supervisors of the Luxembourg financial sector collaborate closely with their peers in the EU and globally.

Powell opens the door to a 50-basis-point rate hike, interest rates shoot up and equities crash. And yet, at the time of writing, the VIX index is below 20, raising the question of whether equities are not a bit complacent.

You can probably already hear a little from my tone what my answer is going to be. Still, there is a good reason why implied volatility looks relatively low.