2014 has been a perplexing year for many investors and 2015 may prove no less vexing. Weighing the macro, micro, and “known unknowns,” portfolios may struggle to generate returns next year comparable to those in 2013 or perhaps even those seen this year. In this piece we briefly review the year nearly past and then…
The Bank of Japan’s (BOJ) surprise announcement that it would dramatically ramp up its QE efforts is a tacit admission that “Abenomics” is stalling, and supports our view about the underlying health of the Japanese economy: excessive debt levels, demographics, and overdue structural reforms are serious headwinds to growth. To briefly recap, on October 31…
Though metals and mining equities account for only 17% of the MSCI World Natural Resources Index, their drastic underperformance since 2011 can still be felt in portfolios. Over the last decade, as demand from China and other countries pushed up the slope of demand curves for industrial metals, a supply response by the mining industry…
This chart book presents representative marketable and hedge fund manager performance for third quarter 2014. This quarter US Core Bond, US Bond, and Cash Management managers posted the highest median returns, while Pan-European Equity managers posted the lowest median returns.
Despite the ongoing efforts of central banks to debase their currencies through increasing their monetary bases and some outright calls for devaluations, consumer prices remain weak across much of the developed world, and many market observers have begun to focus on the too-real possibility of the global economy falling into a deflation “trap.” Deflation now…
The Capital Markets Authority of Saudi Arabia recently announced its intention to open the local equity market to direct investment by qualified foreign investors at some point in 2015. These investors must be reputable and substantial financial institutions that manage a minimum of US$ 5 billion in assets. While foreign investors have obtained economic exposure…
By comparing the net flow rate with the real investment return, an institution can determine whether its LTIP is successfully sustaining its role in the institution’s business model The net flow rate is the regular LTIP payout rate plus reinvested operating surpluses, capital additions, and capital withdrawals. Over the long term, the real investment return…
Imagine that during a single year, the following events all took place: a country that produces 13% of the world’s oil became engaged in armed conflict; the United States and other nations fought a self-declared caliphate looking to quickly spread its influence in the oil-rich Middle East; and a nation that produces 3% of the…
Claims that Europe is becoming the next Japan have grown louder in recent months, after Eurozone GDP growth flat-lined in the second quarter and consumer prices increased just 0.4%, the lowest level in nearly five years. Clear parallels do exist between the current Eurozone macroeconomic environment and that which started to take shape in Japan…
Investors should be prepared for increasing stress in China that will impact global markets and create opportunities There are several valid reasons why China may avoid a financial crisis or hard landing given the unique characteristics of the Chinese economy. However, investors should not be complacent. Our view is that the Chinese economy will slow…