EM PM, Ecstrat

Emad Mostaque

EM PM

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.

Thematic (Sector/Industry)

<p>Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence that Qatar and Abu Dhabi in particular may provide a safe haven in turbulent markets and other regional markets look to be approaching a market even in a low oil price environment. Societal change has also started, potentially resulting in more resilient nations in the future.</p>

Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence that Qatar and Abu Dhabi in particular may provide a safe haven in turbulent markets and other regional markets look to be approaching a market even in a low oil price environment. Societal change has also started, potentially resulting in more resilient nations in the future.

Macro Strategist, Saxo Capital Markets

Kay Van-Petersen

Macro Strategist

Saxo Capital Markets

Event-Driven

iShares MSCI Global Min Vol Factor ETF / Event-Driven

<ul><li>Week ahead will see markets further digest the Fed statement &amp; potential 180 degree turn on a rate hike</li><li>Tactically&nbsp;the risk is to the upside in equities, especially in US equities (Nasdaq, tech, biotech)&nbsp;</li><li>Its a PMI themed week with flash PMI data across the globe, that will be heavily watched to see whether we are moving towards softer global growth</li><li>However key data point will be Fri&rsquo;s final GDP reading out of the US, currently expected to be +3.7%</li></ul>

Week ahead will see markets further digest the Fed statement &amp; potential 180 degree turn on a rate hikeTactically&nbsp;the risk is to the upside in equities, especially in US equities (Nasdaq, tech, biotech)&nbsp;Its a PMI themed week with flash PMI data across the globe, that will be heavily watched to see whether we are moving towards softer global growthHowever key data point will be Fri&rsquo;s final GDP reading out of the US, currently expected to be +3.7%

The Macro Take: Fed digestion/indigestion to filter into week, then its all about PMIs & US 2Q GDP

<ul><li>The Fed's surprising dovishness led to confusion in the markets overnight</li><li>The Fed has moved the goalposts (again) on factors that would drive it to raise rates, its getting downright ludicrous</li><li>There is now a clear risk that the Fed will not move on rates in 2015 &amp; 2016 is an election year where we have historically never had a fed hike</li><li>Fed inaction brings on more pressure to is now on the ECB and BoJ</li></ul>

The Fed's surprising dovishness led to confusion in the markets overnightThe Fed has moved the goalposts (again) on factors that would drive it to raise rates, its getting downright ludicrousThere is now a clear risk that the Fed will not move on rates in 2015 &amp; 2016 is an election year where we have historically never had a fed hikeFed inaction brings on more pressure to is now on the ECB and BoJ

Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

<ul><li>Annualised volatility in the S&amp;P500 spiked to 27% in August, its highest level since November 2011. &nbsp;Nonetheless, the 6 month moving average of volatility of 14% remains broadly in line with historical trends over the sweep of the past 45 years.</li><li>The positive surprise on 2Q US real GDP concealed the five year long stall in nominal GDP growth.&nbsp; The US Federal Reserve&rsquo;s unwillingness to combat disinflation has contributed to the growth stall.&nbsp; Investors remain unnerved by the Fed&rsquo;s willingness to tighten monetary policy at a time when inflation continues to undershoot its 2% target.</li><li>I expect financial market volatility to remain high until the Fed more clearly enunciates the goals of monetary policy and why it remains indifferent to achieving its inflation target.</li><li>In Australia, the poor 2Q capex survey confirmed that the economy is on the precipice of a 20% slump in business investment in FY2015/16.&nbsp; The long and drawn out transition from mining to non-mining capex continues to weigh on growth and frustrate the RBA.&nbsp; In my view, the re-balancing of growth will need an assist from further monetary stimulus.</li></ul>

Annualised volatility in the S&amp;P500 spiked to 27% in August, its highest level since November 2011. &nbsp;Nonetheless, the 6 month moving average of volatility of 14% remains broadly in line with historical trends over the sweep of the past 45 years.The positive surprise on 2Q US real GDP concealed the five year long stall in nominal GDP growth.&nbsp; The US Federal Reserve&rsquo;s unwillingness to combat disinflation has contributed to the growth stall.&nbsp; Investors remain unnerved by the Fed&rsquo;s willingness to tighten monetary policy at a time when inflation continues to undershoot its 2% target.I expect financial market volatility to remain high until the Fed more clearly enunciates the goals of monetary policy and why it remains indifferent to achieving its inflation target.In Australia, the poor 2Q capex survey confirmed that the economy is on the precipice of a 20% slump in business investment in FY2015/16.&nbsp; The long and drawn out transition from mining to non-mining capex continues to weigh on growth and frustrate the RBA.&nbsp; In my view, the re-balancing of growth will need an assist from further monetary stimulus.

<ul><li>US price action overnight was disappointing, given strong rally in Eurozone&nbsp;</li><li>China's actions fully focused on economy, not on market, but I'm disappointed&nbsp;</li><li>Good to see a bounce in oil, with the big risk to a Fed rate lift-off oil at $30</li></ul>

US price action overnight was disappointing, given strong rally in Eurozone&nbsp;China's actions fully focused on economy, not on market, but I'm disappointed&nbsp;Good to see a bounce in oil, with the big risk to a Fed rate lift-off oil at $30

Tactical View: We need the US for a sustainable equity bounce

United States

iShares MSCI Global Min Vol Factor ETF is an exchange-traded fund incorporated in the USA. The ETF seeks to track the investment results of an index composed of developed and emerging market equities that, in the aggregate, have lower volatility characteristics relative to the broader developed and emerging equity markets.

iShares MSCI Global Min Vol Factor ETF (ACWV US)

iShares MSCI Global Min Vol Factor ETF (ACWV US)

Will the Gulf remain resilient?

Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence...

Emad Mostaque

The Macro Take: Fed digestion/indigestion to filter into week, then its all about PMIs & US 2Q GDP

Week ahead will see markets further digest the Fed statement & potential 180 degree turn on a rate hike Tactically the risk is to the upside...

Kay Van-Petersen

The Fed Just Missed Their Hiking Window

The Fed's surprising dovishness led to confusion in the markets overnight The Fed has moved the goalposts (again) on factors that would drive it...

Kay Van-Petersen

Weekly Impressions

Annualised volatility in the S&P500 spiked to 27% in August, its highest level since November 2011. Nonetheless, the 6 month moving average...

Sam Ferraro

Tactical View: We need the US for a sustainable equity bounce

US price action overnight was disappointing, given strong rally in Eurozone China's actions fully focused on economy, not on market, but I'm...

Kay Van-Petersen