Ion Sioras

About Ion Sioras

Ion is an investment analyst and supports the portfolio team on implementation and consistency on both individual portfolio and the strategy levels. His investment work is across all the firm’s strategies with a specific focus on the macro component and non-equity classes. Ion joined the firm after completing internships at Credit Suisse and Bank of America Merrill Lynch in London. Previous to that he had completed internships at Cerno Capital and other asset-management institutions. Ion holds a BSc (Hons) in Statistics & Finance from the London School of Economics.

World Monetary Conditions – What Temperature is the Porridge?

By |2019-02-05T15:16:14+00:00February 5th, 2019|Cerno Capital, Cerno Capital Posts, General Investment|

If we cast our minds back to this time a year ago (or even 6 months ago), the common consensus was 2019 was going to be a period of tightening financial conditions. US unemployment was nudging below 4% and wage growth was finally perking up. The S&P 500 was on track for its best start in 30 years. The Fed appeared to be ahead of the pack in actively tightening rates and the ECB was making noises about stabilising QE and raising rates for the first time after the summer of 2019. Fast forward to the ructions of Q4 2018 and central banks seem terrified they have pushed too far too fast. The FOMC meeting in December turned the month from a correction into a rout with Governor Powell’s somewhat headstrong communique on rate increases and autopilot balance sheet runoff. In contrast the latest Fed minutes (only a month later) were as close to total capitulation as the Fed could reach without risking credibility in the markets’ eyes. In his comments, Powell made concessions on the rate path, number of hikes and most importantly on the balance sheet run off. On the other side of the Pacific, China’s Central Bank, [...]

Roma non fuit una die condita – Rome Was Not Built In A Day

By |2018-06-12T14:23:41+00:00June 12th, 2018|Asset Classes, Cerno Capital Posts, General Investment, Government Bonds, Other Posts, Regions|

A short history of Italian government debt Italy’s titanic national debt, similarly to Rome, was not built in a day. In Italy, like much of Europe, the saga begins benignly in the ashes of World War II. The economic miracles experienced by states such as Greece, Germany and Japan in the 1950s-60s as the countries rebuilt their economies from the ground up (with aid from the US Marshall plan) resulted in two decades of breakneck economic growth. In Italy this period was known as ‘il miracolo economico’. GDP growth averaged just below 6% until 1963 and 5% thereafter until 1973. This boom eventually gave way to fiscal largesse in an attempt to continue the dramatic growth rates and associated quality of life improvements the domestic population had grown accustomed to. With the puncturing of ‘il miracolo’ during the 1973 global oil crisis, subsequent Italian governments borrowed their way to increased prosperity. From the Years of Lead in the 1970s to Rampartism in the 80s and the Second Republic of 1992, Italian debt steadily rose from 30% of GDP, along with real living standards. Italy Debt to GDP ratio 1900-2018. Source: Bloomberg By the early 90s where our overview begins, Italian [...]

Inflation Linked Bonds – Why They Don’t Work (In All Situations)

By |2018-03-27T09:22:33+00:00March 27th, 2018|Asset Allocation, Cerno Capital Posts, General Investment, Other Posts|

The first inflation linked bond (or linker) was launched in 1780 by the Massachusetts Bay Company. Although inflation was a much less understood or easily measured concept back then, the need for inflation protection has been acutely felt since the inception of financial markets. Inflation linked bonds (ILBs) only came into investor consciousness properly however post their introduction in the 1980s by the UK DMO and in 1997 by the US Treasury. This resulted in the most liquid inflation linked bond market of today the US$500bn (notional) US TIPs market. TIPs stand for Treasury Inflation Protected Securities. To contextualise the issues of ILBs we must appreciate that their pricing dynamics are essentially the same as nominal bonds. That is to say, the market determined price of a nominal bond is the collection of its cash flows (fixed coupon x principal) and principal repayment, all discounted to the present value via relevant discount rates. Following from this, the sole differentiating technical factor between nominal and ILBs is that the inflation linked bond receives an adjustment to coupons and principal value (paid at maturity) based on an inflation tracking index (typically CPI). Because of this, ILBs (to some degree) suffer or benefit [...]