Investment Note

Market Insights 2015


Wait for it...

"I've got a message for your friend Jim Cramer. The Fed cannot permanently raise stock prices. The idea that the Fed is going one way or the other, and this is what's driving the stock market, is not true. He's one of the great people at looking at businesses, how good is this business, what's the profitability of the business, what's this thing worth? And to have him cheerleading for lower rates 24-hours a day is, I think, unsavory."---James Bullard, St. Louis Federal Reserve President, in reference to CNBC stock market pundit Jim Cramer. 1st September 2015

 

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Black Monday - Time for a performance check

“The stock market is the only market where things go on sale and all the customers run out of the store” – Cullen Roche, Author and Investment Manager 
Stock and bond markets have been very volatile in the last couple of days with wild swings around the world. The problem is reported as having started in the Chinese stock market which was down 8.5% on its own “Black Monday” but spread dramatically to the rest of Asia, Japan and all other markets both developed and emerging. 

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Chinese devaluation - why now?

Last Tuesday, The People’s Bank of China (PBoC) shook global markets from their relative slumber with a sudden and unexpected devaluation of the Chinese Yuan.  The move initially knocked the currency 2% weaker against the US dollar and there were further falls next day as the market got in on the act helping to drive the exchange rate down to a 4-year low. After a few days of confusion, the currency settled around RMB 6.40 against the dollar thanks to intervention by the PBoC who initially appeared surprised by the market’s negative reaction. 

 

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Japan – It has to be different this time

An unprecedented policy initiative demands a new investment approach.

We have written up the bull case for Japan repeatedly in recent years and been invested in Japanese equities for most of that time.  Part of the investment rationale was down to the ambitious reform efforts of the Abe administration and partly our belief that the quantitative easing being undertaken was a true commitment to reflate the economy.  

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Review of the Second Quarter 2015

The second quarter of the year was a stark contrast to the first, with both global economic and geo-political events souring investor sentiments, leading to some increased volatility and overall decline in financial markets. Positively, despite these sharp falls recorded in many markets, our portfolios performed well, mitigating losses and out-performing their respective risk benchmarks. Over the first half of the year the portfolios have all recorded solid absolute and strong relative gains.

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Stick to your principles

“We have to fight for principles. We could maybe set them aside in the short term. But in the medium and long term, we will suffer damage that way.” Angela Merkel, 29th June 2015

“Those are my principles, and if you don’t like them…well, I have others.” Attributed to Groucho Marks in 1983

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Market News

Six month review to end of May 2015
Global stock markets recovered from the December sell off when oil and mining stocks led the market down amid fears of a slowing economy as the price of oil stayed at the lowest level since 2009.  But the stock market was prone to bouts of profit taking owing to the distractions...

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Winner Takes It All

So who saw that coming? Well, hats off to the “well groomed” Glaswegian pensioner, who remains anonymous, who bet £30,000 on a Conservative majority at 7/1. A member of the TAM investment team also had the same bet but, sadly, only a mere tenner. With Ladbrokes poised to pay out around £2 million to those who backed a Conservative majority...

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It's the final countdown

TAM portfolio positioning ahead of the UK general election. So the election is nearly upon us and stock and bond market attention has shifted to what we may wake up to on May 8th. If the 2010 election is anything to go by, the first result out of the 650 constituencies will be known around 11pm in the evening on 7th May and, if you’re feeling up to it...

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Real estate’s safe house for ‘bond refugees’

Cast your mind back to the 2008 crisis. It seemed, the only thing outpacing the unsecured mortgages being underwritten was the speed at which they were being re packaged and issued back to Wall Street. Out of the ashes of this turbulent time in global economics has grown an asset class that while watched with a cautionary eye is starting to show signs of stability, growth...

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Japan – Rise and shine!

Over the years, one has learned to be a little wary of putting out bullish investment notes on Japan. The financial writing landscape is littered with the graves of bull notes written by those who thought this time was different.

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Avoiding falls on the fells

“Whenever people talk about the weather, I always feel certain that they mean something else.” Oscar Wilde 
As far as I know, the great Lakeland fell walker, Alfred Wainwright was, for all his supposed grumpiness, never a keen follower of the Gilt market. But if he had, his eloquent writings about the mountains, in all their moods, would at times be perfectly suited to the challenges faced by mountaineers and bond managers alike. 

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FTSE playing footsie with its 1999 record

Break Up, break out or break down? It’s December 30th 1999, the FTSE 100 has just closed at a record high of 6,950.60. At the time the world was full of promise as it entered a new millennium only for everything to be turned on its head as we suffered the 2000 Dot-com crash.

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A Russian Winter

As a Russian winter bites a new cold war begins. With the crisis in Ukraine potentially tipping back into open warfare and the EU looking to escalate sanctions this is a short piece on the Russian economy and its population’s ability to withstand the current sanctions and austerity measures to live in Mr Putin’s newly coined “Mafia state”. 

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Q€

If size matters then Mario Draghi may just about have delivered. The €1.1 trillion quantitative easing programme announced on 22nd January is bigger than markets had hoped for given the opposition he faced from the German Bundesbank and a large number of the German and Dutch hawks on the Governing Council.

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Great Expectations

A review of 2014 and outlook for 2015 “Spring is the time of year when it is summer in the sun and winter in the shade.” Charles Dickens, Great Expectations. If you were a stock market strategist harbouring secret desires to be a writer of novels or soap opera storylines, you might have been tempted to write the entire chapter or script for 2014 in advance...

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