Global Head of Research, Smartkarma

Mark Artherton

Global Head of Research

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.
​
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.

Macroeconomics

<div class="content-highlight"><p><strong><em>The failure to use or the aggressive implementation of asset write downs in emerging markets and Asia will have far reaching implications for investors.</em></strong></p></div><p><strong><em> </em></strong></p><p>We live in a world where investors are uncertain about asset values both in financial and non-financial companies.  Whilst a lot is written about the nature of bad debts at banks, little has been comprehensively written about the balance sheets of non-financial companies.</p><p>We see the following evidence in our analysis:</p><p> </p><ul><li><div class="content-highlight">The failure of some…</div></li></ul>

The failure to use or the aggressive implementation of asset write downs in emerging markets and Asia will have far reaching implications for investors. We live in a world where investors are uncertain about asset values both in financial and non-financial companies.  Whilst a lot is written about the nature of bad debts at banks, little has been comprehensively written about the balance sheets of non-financial companies.We see the following evidence in our analysis: The failure of some…

<h2><strong>Summary points</strong></h2><ul>
<li><div class="content-highlight"><strong>1986 remians the best comparable for oil prices now in our opinion.</strong></div></li>
<li><div class="content-highlight"><strong>Adjusting the oil price for the action of the dollar improves the analysis.  The dollar and oil/commodities are different and should be treated as such.</strong></div></li>
<li><div class="content-highlight"><strong>Fundamental factors of supply and demand provide a mixed picture for oil.  The 'energy feedback loop' is often overlooked.</strong></div></li>
<li><div class="content-highlight"><strong>The best the <em>market</em> can do is assume that today's real oil price will be the oil price in 12 months time.</strong></div></li>
<li><div class="content-highlight">
<strong>Financialisation of commodities is a big</strong>…</div></li>
</ul>

Summary points
1986 remians the best comparable for oil prices now in our opinion.
Adjusting the oil price for the action of the dollar improves the analysis.  The dollar and oil/commodities are different and should be treated as such.
Fundamental factors of supply and demand provide a mixed picture for oil.  The 'energy feedback loop' is often overlooked.
The best the market can do is assume that today's real oil price will be the oil price in 12 months time.

Financialisation of commodities is a big…


Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Cross Asset Strategy

<p>In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country weightings.</p><p>We provide more detail on each of these countries in the full version of this report, focusing on the economic, financial and structural governance issues that we believe will be the most important market drivers over the course of this year and beyond.</p>

In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country weightings.We provide more detail on each of these countries in the full version of this report, focusing on the economic, financial and structural governance issues that we believe will be the most important market drivers over the course of this year and beyond.

Governance, Valuations and the Crisis of State Capitalism

<p><span lang="EN-US">Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.</span></p>

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.

EM PM, Ecstrat

Emad Mostaque

EM PM

Thematic (Sector/Industry)

<p>In <a href="http://www.smartkarma.com/insights/how-oil-can-head-over-100-by-2017" target="_blank">my last thoughts on oil</a>, where I plotted some of the structural factors that might take it over $100 in the next few years, I noted that the probability of a December OPEC cut was being underpriced by the market.</p><p>Today we have seen headlines that Saudi will do, Draghi-style, "whatever it takes" to stabilize the oil price including co-operating with the broader OPEC cartel.</p><p>A shift in Saudi Arabian production strategy was one of the main drivers of the "double dip" in oil prices over the summer…</p>

In my last thoughts on oil, where I plotted some of the structural factors that might take it over $100 in the next few years, I noted that the probability of a December OPEC cut was being underpriced by the market.Today we have seen headlines that Saudi will do, Draghi-style, "whatever it takes" to stabilize the oil price including co-operating with the broader OPEC cartel.A shift in Saudi Arabian production strategy was one of the main drivers of the "double dip" in oil prices over the summer…

Brazil

Petrobras is a Brazilian multinational corporation primarily engaged in the oil and gas industry, focusing on exploration, production, refining, and distribution activities. The company also operates in natural gas, petrochemicals, fertilizers, and electric power generation. Petrobras was founded on October 3, 1953, and is headquartered in Rio de Janeiro, Brazil.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Petrobras (PBR US)

Beware Impairments in EM and Asia

The failure to use or the aggressive implementation of asset write downs in emerging markets and Asia will have far reaching implications for...

Mark Artherton

Oil After 50%: Where Now for Stocks?

Summary points 1986 remians the best comparable for oil prices now in our opinion. Adjusting the oil price for the action of the dollar improves...

Mark Artherton

Governance, Valuations and the Crisis of State Capitalism

In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country...

John-Paul Smith

China and the EM Ugly Contest

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately...

John-Paul Smith

Is an OPEC Cut Imminent?

In my last thoughts on oil, where I plotted some of the structural factors that might take it over $100 in the next few years, I noted that the...

Emad Mostaque

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)