Next week, the US BEA releases its advance estimate of second-quarter GDP growth. Brace yourself for headlines claiming that the US economy is in recession, and all market reactions that will trigger. But do not be surprised if you're told the opposite two months later.
Harvard's Lawrence Summers was interviewed about inflation last month. His comments focused on a single entity - the Fed. But fighting the causes of today's higher inflation is simply not within the Fed's power.
The past 18 months has seen the biggest bond bear market in almost 50 years. In this Spotlight, we look at why bond prices have fallen so much, how this bear market compares with others, and what returns and volatility we are likely to see going ahead.
This Research Roundtable focused on the Aspect Capital Diversified Futures strategy, with senior practitioners deciding, after briefings, Q&A and debate, their individual rating for the strategy and whether to include it on a hypothetical APL and/or multi-manager portfolios. Afterwards, the meeting is truncated and published for on-demand viewing by all Forum members.
These two papers relate to some interesting quirks of the finance industry. The first finds that the accuracy of currency forecasts is worse than could be achieved from random predictions. The second gives a different slant of the large increase in the size of the financial sector.
As policymakers begin to craft a new Bretton Woods, and seek to embed the values that liberal democracies want to uphold, practitioners must understand the implications for portfolios.
We may indeed be in for a shortish period of high inflation and low growth - but as to this leading to 1980s-style stagflation? It's nuts and you can clearly see it's nuts!
The next 10 years are likely to be dramatically different than the last 10 years, and investors will need allocations to alternative investments in this challenging environment.
We must take a multi-factor approach to analysing funds – including ESG, Quality, Size, amongst others – to ensure portfolios reflect the investor's longer-term philosophy and/or shorter term views.
Prolonged exposure to high volatility causes investors to subsequently underestimate volatility (and vice versa), leading to predictability in stock returns - and the ability to construct a trading strategy that exploits the effect.
Simply put, the effort to fight inflation could easily crash the economy, the markets, or both. The historical evidence shows that a soft landing is highly improbable. A recession in the next two years is likely.
Since I addressed Markets Summit 2022 back on 23 February, arguing it was time for a new investing playbook, there has been a major repricing in financial assets. The adjustment has further to run.
Since I addressed Markets Summit 2022 back on 23 February, arguing "The days of abnormal monetary policy are over", Russia's invasion of Ukraine has triggered a food and energy crisis while declining consumer sentiment and Chinese lockdowns provide headwinds to growth.
The arguments for and against active and passive management are much more nuanced than is often suggested by proponents on either side. In this Spotlight, we review the hard facts as represented by the S&P Index Versus Active (SPIVA) data, which farrelly’s views as the definitive database on active management.
With stock market valuations close to record highs, and interest rates beginning to rise from all-time lows, traditional portfolios are likely to disappoint in the years ahead.
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