Big Winners in the Neglected Frontier Universe
Our Q1 2017 Global Market Outlook, Who Knows? Navigating the Known Knowns and Underappreciated Knowns In Current Market Consensus, examines vulnerabilities in the bullish consensus narrative underpinning global equity markets. The key vulnerabilities discussed are U.S. dollar appreciation, elevated U.S. Small Cap valuations, questionable assumptions behind the bullish narrative on EM equities, as well as gathering geopolitical risks.
Q1 2017: Who Knows? Navigating the Known Knowns and Underappreciated Knowns In Current Market Consensus
Our Q1 2017 Global Market Outlook, Who Knows? Navigating the Known Knowns and Underappreciated Knowns In Current Market Consensus, examines vulnerabilities in the bullish consensus narrative underpinning global equity markets. The key vulnerabilities discussed are U.S. dollar appreciation, elevated U.S. Small Cap valuations, questionable assumptions behind the bullish narrative on EM equities, as well as gathering geopolitical risks.
Goldilocks is On life Support: Gathering Policy Headwinds and Monetary Policy Exhaustion
Our outlook looks at global equity markets, earnings, emerging markets, and currencies through the end of the year in the face of another interest rate hike in December and impending political events in the U.S. and Europe. We also evaluate the longer term macroeconomic and investment strategy implications of impending monetary policy exhaustion and resurgent populism in a piece entitled: Goldilocks is on Life Support: Investment Strategy in Light of Monetary Policy Exhaustion and Resurgent Populism
The Revenge Of The Precariat Over Davos Man
The turmoil that erupted after the June 23rd Brexit referendum has purportedly prompted many people who voted “Leave” to rethink their decision. New PM Theresa May has stated that “Brexit means Brexit,” dimming hopes that the referendum’s results would be reversed; but also inferring that Article 50 will not be invoked until next year. May has also appointed a number of prominent Brexit supporters to her cabinet,
with David Davis heading the new “Brexit Ministry” and Boris Johnson installed as the Foreign Secretary. These pronouncements and appointments could indicate that she has succumbed to Brexit (despite her earlier opposition) or it could be a shrewd political strategy to allow its economic and political consequences to hit home with voters and force her former rivals to “own” the fallout if and when the public turns on Brexit and its proponents. If future opinion polls show that a decisive plurality of UK voters favor remaining in the EU, this would give the British government the excuse necessary to call for a second plebiscite.
Q1 2016 – Equities Elude The Four Horsemen…Again!
The upsurge in equity prices that started on March 10, 2009 has been among the most despised and distrusted bullmarkets of all time. For each of its seven years, newfound horror stories materialized to interrupt the bull trend with corrections roughly as large and as scary as the one which began this year. In 2009 the S&P 500, still reeling from the aftermath of the GFC, declined by 25% through March 9, 2009. In 2010, fear over the U.S. deficit set off a -15 % correction. In 2011, panic over a U.S. Treasury default sent the S&P down
-19.5%. In 2012, the euro crisis caused two corrections, -10% in the spring and then -8% in the autumn. In 2013, the panic was about Federal Reserve tapering and a U.S. government shutdown, although these only hit the S&P by -6%. In 2014, carnage in the Middle East and Ukraine catalyzed an -8% setback. And last summer, policy blunders in China caused a correction of -12%. Importantly, each of these corrections turned out to be a buying opportunity.