Argonautica

Professional investors can review published thought leadership and market updates from the Argonaut Investment Team.

3 posts found for August 2012

‘A Quiz on Sovereign Risk, European economics and stock market returns’

1.) Which two countries in the world have the lowest implied sovereign risk? 2.) Which European economies are now larger than at the peak of the last economic cycle in 2007? 3.) The two best performing European stock markets since the market bottom in March 2009 (in Euro’s) have been in which countries? 1.) Which two countries in the world have the lowest implied sovereign risk? Answer: Norway and Sweden. Credit markets articulate concerns about sovereign risk through the CDS market (the cost…

‘Is Nestle the world’s cheapest “safe haven” asset?’

Despite being Europe’s biggest stock by market capitalisation Nestle is often thought to be either too boring or too expensive to warrant much attention. We disagree. We think the “expensive” valuation of 18x 2012 earnings does not take into account the balance sheet strength, the likely future compound earnings and dividend growth or the high probability that these growth ambitions will be achieved. Nestle reported its financial results for H1 2012 this morning. These highlighted that 2012 will…

‘Can Draghi take the Euro-zone off the modern day gold standard?’

We at Argonaut have consistently argued that the Euro-zone was uniquely vulnerable to a sovereign debt crisis – not because of high levels of debt and fiscal deficits – but because there was no central bank buyer of sovereign debt as a last resort. No sovereign should ever default on debt denominated in a currency which its central bank can print. But within the Eurosystem it is the ECB which controls the printing presses, not the national central banks. As a result, Euro-zone sovereign debt has…