Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

Phase one of the EM sell-off has been driven by the rising <a href="https://www.smartkarma.com/entities/22821" target="_blank" data-smartkarma-citation="entities:22821:1">USD (USD CURNCY)</a> and concerns about the impact of monetary tightening, compounded by investors belatedly rebalancing portfolios away from emerging markets towards US equities, having underestimated the inherent strengths of the US economy and corporate sector since 2009.As I predicted in the <a href="https://www.smartkarma.com/insights/the-us-china-relationship-investors-complacent-despite-irreconcilable-differences" target="_blank">May</a> and <a href="https://www.smartkarma.com/insights/growth-shock-is-the-next-phase-for-global-equity-markets" target="_blank">June</a> reports on this site, markets have now moved into phase two, comprising a scare around global growth, given the increasingly obvious problems through much of Europe and in the major emerging economies, due to domestic political issues and/or upward pressure on domestic interest rates, but above all the threat of increasing trade tariffs.

Phase one of the EM sell-off has been driven by the rising USD (USD CURNCY) and concerns about the impact of monetary tightening, compounded by investors belatedly rebalancing portfolios away from emerging markets towards US equities, having underestimated the inherent strengths of the US economy and corporate sector since 2009.As I predicted in the May and June reports on this site, markets have now moved into phase two, comprising a scare around global growth, given the increasingly obvious problems through much of Europe and in the major emerging economies, due to domestic political issues and/or upward pressure on domestic interest rates, but above all the threat of increasing trade tariffs.

Still Too Early to Buy Emerging Equities Given the Deteriorating Outlook for China and India

Cross-Asset Liquidity Strategist, CrossBorder Capital

Michael J. Howell

Cross-Asset Liquidity Strategist

Implementing Research Using Alt Data & AI

CrossBorder Capital

CrossBorder Capital is a London-based independent investment advisory firm. Founded in 1996, it exploits a gap in the investment arena by focusing on Central bank liquidity. 

It specialises in the monitoring and analysis of global liquidity flows - an important determinant of asset prices, from currencies through to bonds, equities and real estate.

CrossBorder Capital implements its investment strategy and currently manages over US$ 350m.


FX & Rates

This old Wall Street adage should be writ large across traders screens and read in plurals, because its not just the US Federal Reserve that is tightening monetary policy – many other policy-makers are too. Across the eighty-odd Central Banks we regularly monitor each month, a whopping two-thirds are now running tight liquidity policies. This high figure, which in practice rarely gets much higher, is shown in the first chart. In fact, in the Developed World the proportion jumps to a huge…

This old Wall Street adage should be writ large across traders screens and read in plurals, because its not just the US Federal Reserve that is tightening monetary policy – many other policy-makers are too. Across the eighty-odd Central Banks we regularly monitor each month, a whopping two-thirds are now running tight liquidity policies. This high figure, which in practice rarely gets much higher, is shown in the first chart. In fact, in the Developed World the proportion jumps to a huge…

Don’t Fight The Fedsssssssss….World Money Is Too Tight

FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

The rise in USD/JPY is surprising many, breaking away from US yields and perceptions that JPY should act as a safe haven in times of global market uncertainty.  However, the USD/JPY 10-year yield advantage is around a high since 2007 and consistent with a weaker JPY in a broad sense.  JPY assets have been behaving more like Asia regional assets.  BoJ QE continues apace, while the Fed is now in QT. Real yields have widened significantly in favour of the USD, especially if you consider rising wages in Japan.  JPY may be evolving from a safe haven to a regional currency.  BoJ QE policy may also be reasserting a negative influence on the currency.

The rise in USD/JPY is surprising many, breaking away from US yields and perceptions that JPY should act as a safe haven in times of global market uncertainty.  However, the USD/JPY 10-year yield advantage is around a high since 2007 and consistent with a weaker JPY in a broad sense.  JPY assets have been behaving more like Asia regional assets.  BoJ QE continues apace, while the Fed is now in QT. Real yields have widened significantly in favour of the USD, especially if you consider rising wages in Japan.  JPY may be evolving from a safe haven to a regional currency.  BoJ QE policy may also be reasserting a negative influence on the currency. 

QE Come-Back and Regional Forces Drive JPY

The fall in gold may make sense against the stronger USD.  However, it is odd to see it underperform other G10 currencies in an environment of higher global market volatility and increasing inflation pressure in the US.  The steep fall in CNY may reflect a new policy era under a new central bank governor, allowing currency flexibility to act as a shock absorber for the economy. It hasn't led to capital flight from China, and this may be helping limit contagion to global markets.  However, weak Chinese currency and equities are spreading more clearly to Asian markets. The threat of tariffs has not significantly dampened activity indicators in Asia or globally.  US surveys are still reporting rude health.  Inflation risks are rising in the US and are likely to keep the Fed raising rates at a steady pace.  The USD may remain relatively strong against most other currencies while it continues to raise rates.  Negative feedback from global market volatility and tariffs to US markets and economic confidence may not be sufficient yet to halt the USD’s advance.

The fall in gold may make sense against the stronger USD.  However, it is odd to see it underperform other G10 currencies in an environment of higher global market volatility and increasing inflation pressure in the US.  The steep fall in CNY may reflect a new policy era under a new central bank governor, allowing currency flexibility to act as a shock absorber for the economy. It hasn't led to capital flight from China, and this may be helping limit contagion to global markets.  However, weak Chinese currency and equities are spreading more clearly to Asian markets. The threat of tariffs has not significantly dampened activity indicators in Asia or globally.  US surveys are still reporting rude health.  Inflation risks are rising in the US and are likely to keep the Fed raising rates at a steady pace.  The USD may remain relatively strong against most other currencies while it continues to raise rates.  Negative feedback from global market volatility and tariffs to US markets and economic confidence may not be sufficient yet to halt the USD’s advance.

Gold Confounds, A New Era of CNY Flexibility, Inflation Pressure Builds in the USA

The rapid demise in Chinese assets on Monday on rehashed news that the US is set to announce investment restrictions, despite RRR cuts, reveals a deeper vulnerability in investor confidence in China.  The US equity market started to show signs of negative feedback from the US administration’s protectionist policies.  The remarkably contradictory comments by Navarro breed even more confusion than normal over White House policy.  If economic and investor confidence has been unsettled in Asia and Europe, and the USA is starting to feel negative feedback from its own policies, gold may be poised for a recovery.

The rapid demise in Chinese assets on Monday on rehashed news that the US is set to announce investment restrictions, despite RRR cuts, reveals a deeper vulnerability in investor confidence in China.  The US equity market started to show signs of negative feedback from the US administration’s protectionist policies.  The remarkably contradictory comments by Navarro breed even more confusion than normal over White House policy.  If economic and investor confidence has been unsettled in Asia and Europe, and the USA is starting to feel negative feedback from its own policies, gold may be poised for a recovery.

Negative Feedback from US Protectionist Policies May Boost Gold

United States

The euro is the official currency of the European Economic & Monetary Union.  The US dollar is the official currency of the United States of America.

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EURO/US DOLLAR (EURUSD CURNCY)

Still Too Early to Buy Emerging Equities Given the Deteriorating Outlook for China and India

Phase one of the EM sell-off has been driven by the rising USD (USD CURNCY) and concerns about the impact of monetary tightening, compounded by...

John-Paul Smith

Don’t Fight The Fedsssssssss….World Money Is Too Tight

This old Wall Street adage should be writ large across traders screens and read in plurals, because its not just the US Federal Reserve that is...

Michael J. Howell

QE Come-Back and Regional Forces Drive JPY

The rise in USD/JPY is surprising many, breaking away from US yields and perceptions that JPY should act as a safe haven in times of global market...

Greg Gibbs

Gold Confounds, A New Era of CNY Flexibility, Inflation Pressure Builds in the USA

The fall in gold may make sense against the stronger USD. However, it is odd to see it underperform other G10 currencies in an environment of...

Greg Gibbs

Negative Feedback from US Protectionist Policies May Boost Gold

The rapid demise in Chinese assets on Monday on rehashed news that the US is set to announce investment restrictions, despite RRR cuts, reveals a...

Greg Gibbs

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)