Newsletter

Recent

Tuesday, Jan 5

What could possibly go wrong? That is the question any sensible investor should be asking as the New Year kicks off. It is especially true after the year we have just had and the fact that the overwhelming majority seem to be predicting the world is set to recover as though nothing much has happened. To paraphrase Donald Rumsfeld there are known unknowns, however, and in today’s Macro Briefing TS Lombard explains what could spoil the Goldilocks environment for investors, while Pennock Idea Hub sets out why despite a rebounding global economy,  they  should brace for a sharp equity correction. CLSA meanwhile, highlights which shifts in the world economy sparked by the pandemic are likely to be permanent and what themes should dominate investor thinking in the year ahead. Elsewhere, Macro Insiders warns why the global financial system needs a dramatic, bold – and quick – overhaul and Blonde Money explains why Republicans remain razor-thin favourites in the Georgia Senate run-offs despite the opinion polls
  1. Asset allocation market consensus TS Lombard

    1. Everyone expects the same 2021

    With the consensus predicting a global recovery and a “Goldilocks” environment for global markets, Dario Perkins at TS Lombard provides a timely reminder that consensus opinions at the start of the last few years have had a short shelf life. As he explains, while unknown factors like the coronavirus are by their nature impossible to forecast, there are at least two known risks that could disrupt the optimistic apple cart. Those risks and more are also set to be explored in TS Lombard’s two-day online festival of ideas: the TS Lombard MacroFest, which all Substantive Research buy side subscribers are welcome to attend. The event takes place on the 12th and 13th of January, and will explore whether everything will get back to normal this year, and what that normal means anyway. Among many questions the firm will address across the two days will be whether 2021 will start a re-run of the 20th century’s roaring twenties, whether easy fiscal policy will survive the recovery, and whether the consensus forecast for a falling dollar is likely to trigger a fresh round of currency wars. Register here Jan 12th session, and here for the Jan 13th session.
  2. Global equities the roaring twenties thesis Pennock Idea Hub

    2. The roaring twenties scenario, and what could go wrong

    After a tumultuous 2020, Cam Hui at Pennock Idea Hub outlines why many investors are looking forward to a happy new year, with some predicting the emergence of the new roaring twenties. He explains why the global economy is indeed undergoing a cyclical rebound, but warns of the key risks to that scenario, and why with fast retail and hedge fund money mostly having gone all-in, equity investors should brace for a 5-10% correction at any time.
  3. Technology Thematic investing CLSA

    3. Theorality 2020 – How transformational ideas are becoming business reality

    CLSA’s annual Theorality Report is always a must read, with its deep dive into thematic investing. This year, the firm addresses the most obvious and important question: how Covid-19 has changed the way the world works and lives, and which are adjustments are likely to be temporary and which are permanent. In addition, CLSA highlights which themes are relevant to investors across all sectors going forward, and which sectors and companies they should be focussing on in the year ahead. One of the key themes they focus on is quantum computing, which CLSA argue has begun its path towards commercialisation.
  4. global monetary system The great reset Macro Insiders

    4. The reason for everything

    A fascinating read from Raoul Pal at Macro Insiders takes a deep dive into how the global economy got to the point it is at today, where nobody stands a chance except the rich. With  90% of the population having seen low wage growth for 50 years, this has resulted in a large group split between hard right angry people and hard left angry people all searching for solutions and someone or something to blame, he explains. Pal sets out some of the answers he believes could solve the problem the world finds itself in. They might not be the answers, he says, but they are answers that come from not thinking in the terms of the current system. As Pal puts it, the current situation needs solving – and fast – or the world will have a much bigger problem on its hands: massive civil unrest and more populism.
  5. Georgia senate runoffs US fiscal policy US Politics Blonde Money

    5. Georgia Senate election update – Republicans still razor-thin favourites

    As the Senate run-offs in Georgia come down to the wire, Helen Thomas at Blonde Money explains why despite momentum residing with the Democrats, Republicans remain slight favourites to win both seats. This, she says, despite the latest polling that puts both Democrat candidates ahead. After all, notes Thomas, early voting data shows an older and more diverse electorate than the one which cast their votes in the November elections, with the former benefitting the Republicans, who have historically held the edge in run-off races. The report provides the latest win probabilities for each candidate.