This week we would like to look at the commodities market. This is a fascinating topic in a world coming out of a global pandemic, in the midst of a “Green Transition” and tackling exacerbated income inequalities. Toss into this mix the context of Russian sanctions. These sanctions matter and will have outsized impacts given that the country has a GDP about half that of the UK.
This week we continue with our examination of the news flow that has been rocking markets. We find it interesting that the headlines have inextricably linked the latest burst in inflation and energy prices squarely with the Russia-Ukraine escalation story. However, for those of you that have been long-term readers, you may remember that we had previously made the call for triple digit oil prices even before the Putin-made fiasco. The latest round of sanctions may have only sped up the process. Similarly, we made the call that higher inflation numbers were likely to be printed due to the fiscal impetus and the nature of the responses to Covid-19. Alongside this, we posited that central banks may find it more difficult to normalise policy than the markets may be expecting.
This week we revisit the topic of Russia and the escalation in sanctions by the West. In particular we want to talk about the oft heard about but little known SWIFT system through which some of these sanctions are being imposed, the implications for broader markets and finally asset allocation within this context.
This week we again look to the headlines and look at an issue that has been front and centre for the markets, that of the Ukraine situation (perhaps a reprieve from the endless monetary policy commentary). Firstly, we begin with a rather macabre fact about the markets. Wars (we aren’t suggesting that this will be an all out conflict, at least in the traditional sense) aren’t necessarily bad for returns, think back to the First Gulf War. Looking through history, some of the best returns for equities investors in the first half of the last century were in fact the US’ entry into WWII (1942 - 1945) before entering into a period of what has been termed the postwar blues (1945-50). When was it they saw the next leg up? While it may be a touch oversimplified, entry into the Korean War. For the precious metals fans amongst you, gold hit all time highs over the course of the first year of the Soviet invasion of Afghanistan (1980).
Growing up it was ingrained that two topics are rather taboo to discuss at the dinner table; the first being politics and the second money. So, with the hope that you’re not having dinner as you read, this week we discuss the former while touching on the latter. Perhaps a subject that you may not be expecting to read about in an investment newsletter.
We begin the New Year with some interesting times in the market (has it ever been different?). Inflation Stateside is running at the highest pace in nearly four decades (i.e. 1981), the markets are expecting a tightening by major central banks, the PBOC being the outlier in going the other way in being increasingly accommodative, and Omicron continuing to gain traction. These are just a few of the headlines grabbing investors’ attention. So, with that in mind, let us go back to a basic question to begin the year, where to next? And more importantly where do we allocate? This week we seek to look at two elephants in the room, in answering these questions: monetary policy and geopolitics (which may very well present the next leftfield event).
Robert Swift takes a look at what happened in October in markets. This is an excerpt from Robert's Global High Conviction report for October 2021.
Last week we looked at energy markets and made the case that the recent price action was a result of broader policy failures in speeding up the transition towards a net-zero world. This week we look at the green energy market to understand the incentives, opportunities and outcomes going forward. The irony may be that our bullish case for medium term oil prices may in fact perversely create a tailwind for the broader sector, despite what this may imply for growth prospects and inflation.
Robert Swift takes a look at the current situation in China, examining government intervention and the moral issue of investing in China in particular.
Ahead of his webinar next week (register here), Robert Swift takes a brief look at the state of the world and what it means for the investors out there.
Robert Swift takes a look at the current situation around inflation and looks at how we can invest to maintain our spending power in real terms. A must read for those now receiving next to nothing for their bonds and fixed income.
As long-term investors in Taiwan we prefer to look at the investment flows by Taiwanese companies into China as an indicator of the state of relations and not media speculation regarding the prospect for military hostilities. If China were going to invade Taiwan it would have happened years ago. The financial relationship between China and Taiwan is strong and growing. It is that financial relationship which will ultimately guide China and Taiwan to a sensible compromise regarding political differences.
By now most of the readership, we assume, has heard about the Archegos Capital fiasco. A situation that, last Friday, shook global equity markets. A series of events wiping out close to 50% of the market capitalisation of Discovery, more than 50% of Viacom, 20% off Baidu to name a few, not to mention the fact that it has led to an increased level of volatility in global markets. But, just in case you haven’t and you are an investor who has been scratching his/her head at what has been happening in terms of price action, read on.
Robert Swift takes a look at the shift in language coming from central bankers and finance ministers and, more importantly, the implications for equities and bonds.
Sometimes you get a piece of good advice early in your career, from someone older, that you respect. You should remember that advice and follow it. One of these is often “never say we told you so; it just irritates”. We’re going to break that rule; in a polite way.
This week, in our final article of the year, we make some predictions going into 2021. Hopefully I end up with a better score than the 3.5/5 for 2020. I wouldn’t bet on it, but again this is the investor in me looking at my surroundings and trying to come up with probabilities. So without much ado (not about nothing), here are five more.
Time to review 2020 and prognosticate on 2021. Around this time last year we wrote a piece titled "2019 A Surprisingly Good Year for Risk Assets: 2020 Outlook," time to do it all again.
Recent weeks have highlighted the rather uncomfortable and somewhat frosty relationship between our nation and our largest trading partner. Hence we thought it might be pertinent to revisit the topic, something we first elaborated upon in the infancy of the Trump administration and his “trade war.” Much has changed and the situation continues to evolve.
We won't beat around the bush, this is a simple suggestion to look at listed Infrastructure equities as a source of dividend yield, reliability and yes, even capital growth.
Sid Ruttala fleshes out a number of the points that Robert Swift has been talking about in his weekly Ausbiz appearances. Heading into the pointy end of the US presidential election, there is always heightened uncertainty in investment markets and (as much as we might want to given 2020 so far) this is not the time to bury one’s head in the sand and hope for the best.
We begin this week with the latest update in the throwing of the kitchen sink story which we first elaborated upon, what seems like years ago, in March. Back then we posited that the Federal Reserve would become the lender of last resort for the corporate sector and dispense with all sense of normality. And so here we are, the Federal Reserve has, as of last night (15 June), made a commitment to buy corporate bonds on an individual basis (as opposed to the high-yield ETF that was bought through a special purpose vehicle). This latest action should make for some interesting watching when Powell goes up in front of Congress on June 16th and 17th where he will surely be asked the question of whether the Fed is in the process of nationalising corporate debt. At this point, we ask the question: is it such a stretch to imagine that once you can put credit risk on the balance sheet of a central bank it's not too far to equities risk, is it?
Kevin Smith takes a look at some of the political issues that have contributed to mass protests in Hong Kong and the impact on the risk and return characteristics of the local equity market in the short and long-term.
Kevin Smith takes a look at some of the long-term business management trends in Japan and the impact on reported profits and balance sheets. After two decades of reducing debt, corporate Japan is in a strong position versus their international competitors in a world of Covid-19.
This week we visit perhaps one of the most prominent and divisive topics in investing at present. That is the future of energy markets and, in particular, where the price of oil heads to from here.
As always, take our ramblings with a grain of salt since, like you, we are trying to make sense of an investment universe that gets ahead of us. One recollects the words of Jean Baudrillard in this environment for “We live in a world where there is more and more information, and less and less meaning.” As such we shall try make use of our limited rationality to extrapolate as much meaning as we can.
Robert Swift, portfolio manager of the TAMIM Global High Conviction strategy, suggests three vitally important principles to see you through this coronavirus crisis.
Markets & Commentary
At TAMIM we are committed to educating investors on how best to manage their retirement futures.
Sign up to receive our weekly newsletter:
TAMIM Asset Management provides general information to help you understand our investment approach. Any financial information we provide is not advice, has not considered your personal circumstances and may not be suitable for you.