3C, HY, EM, 3J, ECB, FED and other abbreviations.
- Central Banks policy was (of course) in the spotlight again the past few weeks. In “The limits of monetary policy: Are central banks losing their magic touch?” Deutsche Bank is taking a step back and delves into the pros and cons of the central bank interventions and its implication for the investment process.
- In their Monthly Commodity update ABN-Amro is saying out loud what most already suspected / hoped: “Commodity prices have bottomed”. According to the Dutch bank a weaker US dollar and monetary stimulus by central banks should support the overall demand outlook for commodities.
- In another interesting research paper ABN-Amro is proclaiming that the US Dollar is over. The three drivers which fuelled the US Dollar rally, (among them the falling commodity prices, see previous article), are now less positive.
- In Holland we have a music group called 3js (the three J’s), if you never heard of them, let’s keep it like that. But from an investment perspective you certainly have heard of the three C’s that are rocking the global economic boat. In their Cyclical Outlook Pimco asks the question whether there are “Calmer C’s ahead?” And of course the 3C’s are an abbreviation for China, Commodities & Central Banks.
- Alpha Research published its monthly Asset Allocation Consensus. Among asset managers High Yield is still the favourite fixed income asset class, but a little less overweight then the previous month.
- Robeco is one of the asset managers with a positive outlook on High Yield, which they made very clear with the newsflash “High yield remains our preferred risky asset”. CIO Lucas Daalder tells you why.
- In “EMs trade engine has lost power” AXA is taking a look at world trade and its impact on economic growth in Emerging markets. They show a confrontational chart from which it is clear that global trade is on a much slower growth path then it used to be before the global financial crisis (2008). This is especially worrisome for EM commodity exporters.
The book titled This Time is Different written by Carmen Reinhart and Kenneth Rogoff in 2009 had after publication some negative publicity about errors in the spreadsheets. Whether or not the used figures are true, in the world of investments it is often said that it is really different now. The four most expensive words are “this time it’s different“, according to Sir John Templeton. There are enough reasons to read this book.
Even after the credit crisis in the years 2007-2009 the book is still very topical, it is mainly about the size of government debts. How big are they, and in particular: when are they too big? The introduction back then had the same impact as ‘Capital in the Twenty-First Century’ written by Thomas Piketty in 2004.
The book This Time is Different’ gives a very good impression on how to look at Greece. It is the claim that in the past almost no country has been able to recover on its own from a debt-to-GDP ratio of above 90 percent. This percentage, moreover, was a point of discussion when the spreadsheets were checked.
Currently Greece is still very well above this level, and that sets one thinking. With help from the EU in financing this debt, that does not mean that it will follow the thought of ‘this time is different’…
OpinioPro vs This Time is Different
Different visions and opinions will help to understand figures and visions. However, it is not always necessary to start ‘from scratch’. Especially when it turns out that ‘this time is different’ often leads to very expensive mistakes, or in other words history often repeats itself. The platform of OpinioPro offers investment research of more than 50 asset managers for example in the field of central banks. Is the Quantitative Easing policy of the ECB favourable, or is it doomed to fail. Opinions are divided, and that helps to form your own opinion.
OpinioPro has currently over 2,500 investment research reports on these four subjects at its platform. However, it is possible to search for only ‘Quantitative Easing as well and find the most recent reports of experts in this area. The best ‘research engine’ is now available without registration at www.opiniopro.com
Again almost anything related to “Brexit” scored high in our reader ranking of most read articles. Seven articles about Brexit are a little overdone, but we still managed to include three. That leaves room for four other interesting articles. Here they are…
- Best “catchy” title of the week goes to PGIM with “Are Central Banks Losing Their Mojo?” The article is calling for a comprehensive/coordinated central bank policy (obviously because there is none) in response to mitigate systemic risks.
- Vontobel asks the question: “Is the global economy sliding into recession?” And the answer? Markets probably have discounted an overly pessimistic scenario. But only if (a big or small if?) policymakers are able to restore confidence. For an answer on the if question we refer to the previous article.
- On a positive note, AXA sees no ground for pessimism in their “Economic and financial market outlook 2016”. Bottom line: “financial markets are currently peering too gloomily into the future”.
- In “Sunshine, Lollipops and…” Bill Gross is giving investment advice how to proceed in a world where the summer has passed for the credit based financial system. Winter is coming…
- In “Europe is Revolting” Source is taking a look at the political situation in Europe. Could the possibility of a Brexit, refugee crisis, anti-EU sentiment etc etc be the reason behind the recent boost in Gold?
- In “Brexit: big risk, little reward. The UK referendum on Europe” Blackrock takes a look at the possible implications for the UK of a Brexit. According to them an EU exit will lead to lower UK growth and investment, and potentially higher unemployment and inflation. Are there any benefits? Possibly, but also less certain.
- P. Morgan takes a hands-on approach with their how to invest guide; ”Brexit: How investors should approach the UK referendum”. For the first half of 2016 they expect a weak Sterling and modestly lower growth. For the long term? Even with the benefit of hindsight the economic benefit of the EU membership is hard to quantify for the BoE. The long term impact of a “Stay” or “Leave” is therefore impossible to predict.
Red Notice by Hedge Fund manager Bill Browder has a unique structure. The book starts with the story of a young American who was bullied, did not want to go to college and at the end of high school frustrated his parents by saying he wanted to become a capitalist.
When he did decide to go to college he was confronted with several rejections because his grandfather had been a communist. It might be that this false start was the inspiration to do what he wanted to do: being a pioneer in Eastern Europe. In the 90s nobody wanted to go to Eastern Europe to help the countries who were no longer communist. Bill Browder saw opportunities as a consultant: he switched from giving non-binding advice to being a starting investor who needed to make performance in Eastern European stocks. He established Hermitage Capital, which became a very successful hedge fund. Actually, it became too successful in the country of Putin.
The reason why this book is so very unique shows in the last part. The ‘drive’ to earn money in Russia was very big, but this cost Browder his first marriage. He lost his colleague, who was also his friend, as well. The book shows Bill Browder’s vision on a Russia that is so very different than our western society. The life of Browder has completely turned now; he is no longer a hedge fund manager, he has become a human rights activist and ‘Putin’s No 1 Enemy’ (as he calls himself).
OpinioPro vs Red Notice
Browder needed information to select good, but above all, cheap companies as a hedge fund manager. He needed patience as well, patience to keep searching and patience when buying. Browder did not have Google, it did not exist yet, and he wanted to verify his data with multiple sources. This is exactly what OpinioPro does: you can find information about, for example, Emerging Markets by several sources. The research platform has over 50 asset managers, so you can check out a wide range of subjects. And this is so much faster than the way Bill Browder was able to do it in Russia in the 90s.
However, it is possible to search for only ‘expected returns’ as well and find the most recent reports by experts in this area. The best ‘research engine’ is now available without registration at www.opiniopro.com