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

As I suggested in the 2018 Outlook report published in December (<a href="https://www.smartkarma.com/insights/global-equities-china-technology-and-politics-to-dominate-2018" target="_blank" data-smartkarma-citation="insights:15961">Global Equities: China, Technology and Politics to Dominate 2018</a>), the escalation of tension between the US and China could represent a watershed moment for expectations of global growth and the future of emerging markets, as the post-1991 settlement which facilitated the globalisation of trade and investment flows and kick-started the peace dividend, begins to partially unravel. Against this backdrop, none of the major emerging equity markets offers a combination of attractive valuations together with good or improving sovereign and/or corporate governance factors. This leaves me once again clinging to those markets, such as Thailand, Mexico, Qatar, Taiwan, the Philippines and possibly India, which appear to have defensive qualities, including a relatively low exposure to the direct or indirect effects of the ‘Cold War II’, as the best way to generate relative outperformance.

As I suggested in the 2018 Outlook report published in December (Global Equities: China, Technology and Politics to Dominate 2018), the escalation of tension between the US and China could represent a watershed moment for expectations of global growth and the future of emerging markets, as the post-1991 settlement which facilitated the globalisation of trade and investment flows and kick-started the peace dividend, begins to partially unravel. Against this backdrop, none of the major emerging equity markets offers a combination of attractive valuations together with good or improving sovereign and/or corporate governance factors. This leaves me once again clinging to those markets, such as Thailand, Mexico, Qatar, Taiwan, the Philippines and possibly India, which appear to have defensive qualities, including a relatively low exposure to the direct or indirect effects of the ‘Cold War II’, as the best way to generate relative outperformance.

Emerging Markets Have the Most to Lose from the New ‘Cool War’

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

USD downside momentum and conviction has tapered off with the prospect of higher yields down the road but recent weakness has been more about USD outflows. Our cycle work is leaning to a final bout of USD weakness into our DXY 87 turn target zone that would act as a key turning point for the dollar.We have a key line in the sand for the 10yr yield at 3% above which would start to lend support for a USD bottom. The current yield posture implies we waffle within a correction falling wedge pattern…

USD downside momentum and conviction has tapered off with the prospect of higher yields down the road but recent weakness has been more about USD outflows. Our cycle work is leaning to a final bout of USD weakness into our DXY 87 turn target zone that would act as a key turning point for the dollar.We have a key line in the sand for the 10yr yield at 3% above which would start to lend support for a USD bottom. The current yield posture implies we waffle within a correction falling wedge pattern…

<figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/046/669/original/CP%20header.jpg?1520570037" data-smartkarma-image-id="46669"></figure>Pre NFP Friday 9 March 2018Our base case called for a low and rally from S&amp;P 2,660 to 2,740-50 and where we are currently resting. The following webcast outlines levels in the US that will induce a secondary fade pullback of extended rise that will impact/shift the global cycle. T Note futures have formed a powerful micro triangle pattern that will be followed by an explosive breakout; trigger levels are outlined. Bond yield will act as the primary driver for inflection key equity pivot levels.…

Pre NFP Friday 9 March 2018Our base case called for a low and rally from S&amp;P 2,660 to 2,740-50 and where we are currently resting. The following webcast outlines levels in the US that will induce a secondary fade pullback of extended rise that will impact/shift the global cycle. T Note futures have formed a powerful micro triangle pattern that will be followed by an explosive breakout; trigger levels are outlined. Bond yield will act as the primary driver for inflection key equity pivot levels.…

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.


Macroeconomics

The ‘big’ risks for financial markets centre on US bonds, not equities. In other words, less on the price of risk assets and more on the valuation of underlying ‘safe’ assets. We have warned over recent months that US safe assets – the US dollar and US Treasuries – have been trading 10-20% expensive. As they adjust lower, more traditional risk assets will similarly fall in price, much like previously occurred in 1987 and 1994. The question we have been posing is whether this would be an orderly…

The ‘big’ risks for financial markets centre on US bonds, not equities. In other words, less on the price of risk assets and more on the valuation of underlying ‘safe’ assets. We have warned over recent months that US safe assets – the US dollar and US Treasuries – have been trading 10-20% expensive. As they adjust lower, more traditional risk assets will similarly fall in price, much like previously occurred in 1987 and 1994. The question we have been posing is whether this would be an orderly…

US Treasury (10 Yr Generic) / Technical Analysis

Our US 10yr yield fade call from 2.95% comes on the back of our <a href="https://www.smartkarma.com/insights/powerful-yield-trigger-chart" target="_blank" data-smartkarma-citation="insights:16925">Powerful Yield Trigger Chart</a> insight from January 18th. We have fulfilled our objective at 2.86-95% or for a fade from the sub 3% macro line in the sand. The highly charged rise in yield was not the sole inflection for the equity decline (more about the XIV unwind) but does bring yield and inflation fears to the surface as a preview of jitters to re emerge in the summer. For now we see yields backing off and lending some support to…

Our US 10yr yield fade call from 2.95% comes on the back of our Powerful Yield Trigger Chart insight from January 18th. We have fulfilled our objective at 2.86-95% or for a fade from the sub 3% macro line in the sand. The highly charged rise in yield was not the sole inflection for the equity decline (more about the XIV unwind) but does bring yield and inflation fears to the surface as a preview of jitters to re emerge in the summer. For now we see yields backing off and lending some support to…

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US Treasury (10 Yr Generic) (GT10 GOVT)

Emerging Markets Have the Most to Lose from the New ‘Cool War’

As I suggested in the 2018 Outlook report published in December (Global Equities: China, Technology and Politics to Dominate 2018), the escalation...

John-Paul Smith

USD Major Cycle Low in Sight

USD downside momentum and conviction has tapered off with the prospect of higher yields down the road but recent weakness has been more about USD...

Thomas Schroeder

S&P/Bond Levels that Will Tip the Scales

Pre NFP Friday 9 March 2018Our base case called for a low and rally from S&P 2,660 to 2,740-50 and where we are currently resting. The...

Thomas Schroeder

How China Sets World Interest Rates

The ‘big’ risks for financial markets centre on US bonds, not equities. In other words, less on the price of risk assets and more on the valuation...

Michael J. Howell

US 10yr Yield Fade Call to 2.65%

Our US 10yr yield fade call from 2.95% comes on the back of our Powerful Yield Trigger Chart insight from January 18th. We have fulfilled our...

Thomas Schroeder

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