Here’s the unstoppable 35-year ‘golden age’ for bonds in one clear Credit Suisse chart

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LONDON – The global bond market has been on unstoppable run for almost four decades, earning a real return of 856% since 1982, according to a report by Credit Suisse.

The Swiss investment bank, along with London Business School, analysed the real return of the world bond index since 1900.

From 1982 until the end of 2015, the return was 7.9% a year, despite periods of volatility.

"There were obviously setbacks, but world bonds gave positive real returns in 26 of the 34 years," Credit Suisse said in the report. 

A period of relatively stable economic growth, low inflation and advances in pricing and market technology combined to create a golden age for bonds. When financial markets looked wobbly, such as during periods since the 2008 financial crisis, central banks have stepped in to purchase hundreds of billions of government bonds, helping to propel the index even higher.

In the words of Credit Suisse, bonds have "produced equity-like performance, yet with much lower volatility in an apparent violation of the law of risk and return."

Here is the chart:


The past 35 years have been exceptional. Before the 1980s, bonds had a difficult past, especially during periods of high inflation and war. Bonds have fixed returns, in the form of interest, and so are generally shunned by investors when prices are rising.

Between 1900 and 1982, the average annualized real bond return across the 21 major economies was just 1.0% per year.

The question facing investors is how long this golden age will last. Credit Suisse said "extrapolating these high returns into the future would be fantasy."

"They have arisen from non-repeatable factors, and future returns are likely to be far lower," the analysts said. "More generally, this is a further example of the importance of looking at very long periods of history in order to understand markets. Even periods as long as three or four decades can be quite misleading if naively extrapolated."


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Over 50% of people in the UK think they’d be better off starting a business abroad

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More than 50% of people polled in a survey of 1,500 people in the UK think they'd be better off launching a business in a different country, according to a study published on Tuesday.

The UK Entrepreneurship Barometer study, carried out by venture capital firm Idinvest, found that just 44% of respondents consider the UK the best country to launch a startup.

Other countries that appeal to Brits include Germany, which was ranked as the most desirable country to launch a business after the UK, followed by Sweden, Switzerland, and France.

German politicians have been trying to tempt UK startups to cities like Berlin following the Brexit vote on June 23 and several companies have already left London's Tech City, according to The Financial Times

"While some future entrepreneurs will be considering their options in light of Brexit, the majority continue to see themselves as future business owners and start-up founders," said Christophe Bavière, CEO and Benoist Grossmann, managing partner at Idinvest Partners.

Despite concerns around Brexit, 57% of respondents said they were optimistic about the UK's economic performance over the next year.

The study also found that more than half of Brits are keen to start their own company at some point and that two out of every 10 Brits will be an entrepreneurs of some sort by 2018.

"These findings clearly demonstrate the strong entrepreneurial drive at the heart of the nation and the belief that the UK continues to provide a supportive social and economic environment to foster this talent — a view that we continue to support," said Bavière.

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The 10 things in advertising you need to know today

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Good morning. Here's everything you need to know in the world of advertising today.

1. Rubicon Project's president and 6 other top execs are leaving. The departures are part of a streamlining process announced in November, when the company said it was reducing 19% of its total headcount — but rumors are also swirling that the company is setting itself up for a sale.

2. Verizon cut Yahoo's acquisition price by $350 million. Both companies agreed to cut the price of their deal following Yahoo's disclosure of two huge data breaches.

3. A London analyst sees difficulties for Snap. A note from Atlantic Equities said the app could face difficulties, with Facebook adding more Snapchat features to its own apps and it faces the challenge of growing beyond its current demographic of young people.

4. YouTube agreed to a third party audit of its ad metrics. Google said it would allow the Media Rating Council to track ad measurements on the video site, to ensure it's accurately reporting viewing statistics to advertisers.

5. Goldman Sachs predicted Snap will generate $2 billion in revenue in 2018. The figure, five times last year's sales for the app, is being used by Goldman sales staff when speaking with potential Snap investors.

6. Facebook is in talks with the MLB to livestream one game a week. It's unclear which baseball games would be streamed as part of the deal, which is reportedly in the advanced stages of discussion.

7. Snapchat is blaming slow user growth on Android and it's worrying investors. Users had difficulties accessing the Android version of the app, which the company said it was prioritizing.

8. Netflix forced to pull German ads for its new series "Santa Clarita Diet," which featured a dismembered finger. The public complained the ads, featuring a cut up finger in the style of a German currywurst, were "offensive to children and young people, fear-evoking, and disgusting."

9. Vans wants to broaden its appeal beyond skateboarding with its latest campaign. The newest ads highlight how different creatives are appropriating the fashion brand's "Off the Wall" slogan to define how they express themselves.

10. Chipotle is fixing online ordering speeds. It rolled a new system this week after customer complaints and then saw "record levels" of online orders.

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A Berlin venture capital fund has raised €180 million to invest in early stage European startups


Project A, a venture capital firm based in Berlin, has raised €180 million (£150 million, or $189 million) to invest in early stage startups in Europe.

The announcement comes as the German capital angles to become a new epicentre of technology on the continent amid uncertainty in London following 2016's Brexit vote.

There are two parts to this €180 million pot. The larger amount, €140 million (£118 million, $147 million), is a whole new fund, designed to invest in new European startups. There's also an extra €40 million (£34 million, $42 million), for use in additional investment rounds for companies already in Project A's portfolio. (Project A's previous, first fund was €80 million (£67 million, £84 million).)

Launched in 2012, Project A's previous investments include London money transfer company WorldRemit, UK spa-booking service Treatwell, and personalised children's books company Lost My Name.

In an email, the Berlin VC firm said its focus is on "the digital technology space" and that it offers startups it invests in operational support from 100 "operational experts" — providing them with "hands-on support in the areas of IT, marketing & brand building, business intelligence, sales and recruiting."

Since Britain's shock June 2016 vote to leave the European Union, there has been intense uncertainty over what it will mean for the tech sector in London — widely regarded as the heart of the technology industry in Europe. Berlin (among other cities) has tried to aggressively court British tech talent, writing letters to UK startups and even driving trucks with adverts on them around the capital.

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BRITAIN BEATS: The UK economy grew faster than previously thought at the end of 2016

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Britain's economy grew faster than previously thought in the fourth quarter of 2016, according to a second estimate of GDP released by the Office for National Statistics on Wednesday.

According to the ONS' data, GDP grew by 0.7% in the quarter at the second reading, above the previous reading of 0.6% released in January.

An ONS release said:

"UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.7% between Quarter 3 (July to Sept) 2016 and Quarter 4 (Oct to Dec) 2016, revised up 0.1 percentage points from the preliminary estimate of GDP published on 26 January 2017. Upward revisions (due to later data received) within the manufacturing industries is the main reason (these revisions were first published as part of the Index of Production for December 2016 released on 10 February 2017)."

On a year-to-year basis, growth was actually lower than the first reading with UK GDP 2.o% higher over the course of the last 12 months, compared to a previous estimate of 2.2%

The data was closely watched as Q4 was just the second full quarter of activity after Britain's historic vote to leave the European Union. Initial predictions of economic doom after the Brexit vote have so far failed to materialise — with the exception of the crashing pound — and economic data has broadly held up well.

UK GDP has now grown in 16 consecutive quarters. The last time UK GDP shrunk over a quarter came in Q4 of 2012 when the economy readjusted to normality following a huge boost from the 2012 Olympic Games in London.

Here is the chart showing GDP growth over the past 13 years:

UK GDP q4 2016 2nd estimate

As with the first reading, the ONS' data showed that growth in the quarter was once again largely driven by a booming services sector, which grew 0.8% from the previous three months. Services — which accounts for everything from banking to waitressing — is the dominant sector the UK economy, making up roughly 80% of all GDP. Therefore, when it performs strongly, so too does the economy as a whole.

"Overall, the dominant services sector continued to grow steadily, due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017," the ONS' head of GDP, Darren Morgan said.

The service sector's boom helped mask sluggish growth from the production, construction and agriculture sectors, once again.

Sterling slipped a little on the release, falling from roughly flat on the day against the dollar, to a loss of around 0.2%. As of 9.40 a.m. GMT, 10 minutes after the release, it is trading at $1.2444, a fall of 0.21%.

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