The revolving door at the White House continued its rapid rotation during August. The Trump inner circle is now almost unrecognizable from the team surrounding him in January. If the White House was in the private sector the shareholders would be calling for the scalp of the CEO – and probably well before now. Soon everyone will be required to wear name tags. It is beyond fiction.
UFC and mixed martial arts (MMA) have seen their popularity grow in recent years from relative obscurity, banned in many states, to the mainstream. Does the current fight represent a view of the future (e.g. the NFL and the upstart AFL) or a novelty (e.g. the XFL)? The fight highlights the topic of convergence and its current poignancy, from boxing to politics to investments.
At the time of writing (July 25) equity markets are generally up for the month – not massively (most less than 1% based on MSCI local currency price indices) but this modest appreciation contributes to a healthy run in 2017. The US and UK indices are both up more than 1% month-to-date.
It would be pleasing to see a month go by without a terrorist atrocity somewhere in the world but, sadly, May was not going to be one of those months. The Manchester abomination is just one more in a string of similar attacks. It is difficult for the authorities anywhere to protect citizens from extremists who operate alone, wear no uniform and are prepared to die for their beliefs. There will, undoubtedly, be many more unhappy months.
One of the most common questions that we’ve heard/received from clients over the past year has been our view on active versus passive management. Active management has come under significant pressure due to its underperformance relative to passive over the past few years, particularly in the very competitive US large cap space, as well as the broader theme of fee compression in the industry. This theme is well illustrated by mutual fund flows over the past couple of years. According to Morningstar, passive fund strategies in the U.S. experienced inflows of $505 billion in 2016, while active funds saw outflows of $340 billion. Will this trend continue, or will active management again have its day in the sun?
With markets seeking to avoid similar toe-stubbing in the policy arena, we examine the drivers of the fixed income markets for the near term. In doing so, we consider President Trump’s fiscal policy influence, Janet Yellen’s monetary policy impacts and evolving exogenous geopolitical dynamics. So, who or what will determine the market’s course moving forward?
Recent months have been unusually eventful, characterized by a swing in the global political landscape, U.S. dollar strength, geopolitical flash points, demonetization in India and military coups in Turkey (among many others), all feeding into general market nervousness and a significant rise in volatility. This was certainly the case in emerging markets.
One of the hottest gifts of the recent holiday season was the Amazon Echo, which offers to ease the lives of customers by directing the system with its famous command “Alexa…” This move toward the automation of a greater percentage of our lives has a parallel in the investing world.
Can Mr. Trump perform miracles? How can we indulge in meaningful speculation about the unforecastable? The President-elect does have some relevant experience — running companies with mountains of debt.
One topic noticeably absent from the recent presidential election was the U.S. government debt. In fact, the topic seems to have fallen from public consciousness. In the medium term we do not expect current debt levels to cause a shock, but the longer-term effects could drag on growth, especially with an aging population and sluggish economic growth.