Several converging issues should make the headlines this month, with Brexit being top of mind for your editor. The deadline of March 29th is fast approaching, with markets reflecting a belief that an extension to negotiations will be sought, with the possibility of a second referendum being held. This outcome was discussed in past issues and still seems the most likely. However, one shouldn’t discount incompetence on the part of the May government and a “hard” Brexit with no deal remains a possibility. We reiterate our view that it remains premature to take meaningful positions in either the FTSE or the pound until after a resolution to the deadline....
The events of the past month confirmed the ongoing deterioration in the global geopolitical environment and remind us of the ultimately negative consequences for the global economy and, hence, markets. The absence of the United States from its traditional role as leader of the West and global “policeman” has emboldened authoritarian regimes to take provocative actions they would not have considered previously for fear of retribution. This trend is troubling and symptomatic of…..
A basic premise at the Global Investment Letter is that global investment returns are a product of the intersection of economic, political and historic influences. The relative importance of the respective inputs will, of course, change over time. It is our view that all three influences will assert themselves over the next 10-15 years, producing significant economic and geopolitical change. It will be a challenging environment for all, but also one of opportunity for the alert investor. The geopolitical events of the past month have only served to confirm our premise. We are spoiled for choice on where to start...
The year 2017 saw the emergence of a host of reasons to be concerned about the geopolitical state of the world. Interestingly, these concerns, geopolitical or otherwise, did not translate into caution in the capital markets. Most global stock exchanges performed strongly in 2017, aided by reasonably good economic performance within the context of ongoing central bank intervention. Most noteworthy was the lack of volatility displayed by many major markets, which approached or exceeded historic precedents. This diminished level of volatility suggests a lack of concern on the part of investors and is difficult to reconcile with the current geopolitical environment. ...
Most major world equity indices have posted strong advances thus far in 2017. Volatility has been unusually muted in most developed markets as investors have apparently adopted a “glass half full” approach to interpreting the investment landscape. An optimistic viewpoint is undoubtedly useful in life, but investors must cultivate a dispassionate, realistic view of the environment. Thus, a periodic review of some of the key macro factors affecting investors is useful...
Over the past 25 years, there has been an explosion of financial products, most notably all manner of ETFs covering almost every conceivable country and asset class. As well, there has been an enormous amount of attention directed at the dramatic growth of China and other emerging markets as well as other developments that have illustrated the opportunities available to global investors. Yet when I travel internationally and/or speak with friends in the investment business, I am surprised at the narrowness of most of their investment focus. The majority of investors still devote the bulk of their assets and attention to their domestic markets, or to a particular industry with which they are comfortable...
