William of Ockham was a fourteenth-century English Franciscan friar. As an unusually clever person, he wasn’t very much liked by either the church (for insisting on inserting logic into theological discussions) or by the Pope himself.
In March 1738, a British mariner Robert Jenkins was ordered to testify in front of Parliament. He presented MPs with an unusually gruesome item: his decomposing ear. Seven years before, the ear had been severed by a Spanish officer off the coast of Florida. Parliament had had enough and voted to wage an outlandish war on Spain… over Jenkins’ ear. Eventually, the conflict merged with the 1742 War of...
A ‘poison pill' is a corporate tactic where companies resisting a hostile takeover somehow dilute shareholder worth. A common tactic is to take on large debt to make the company unattractive and scare the corporate raiders away.
In 2016, Ricardo Torres Martinez, a teacher, took his students to a farm in Apodaca, Mexico. He lined them up in rows in the Bull Ring and told them to sit absolutely still. Then he let the bull loose. Incredibly, the bull ran back and forth between the students, but, incredibly, no one was hurt. “The animal doesn’t attack. It just wants to be safe”.
Coming off the heels of Oscar night (Oppenheimer cleaned up and Robert Downey Jr. finally got a long-overdue Academy Award), I look at markets, and I am reminded of the final scene of Billy Wilder’s “Some Like it Hot” (1959).
Last week’s Core Personal Expenditure number, the Fed’s preferred gauge of inflation, continued to fall, down to 2.8% for the year.
Since the dawn of time, human beings have been nothing but tool users and toolmakers. Our insatiable hunger for the next thing always drives change. At some point in the early twentieth century, growth became exponential. It took us a little less than 400,000 years to learn to use the wheel. Yet we went from using gas lamps to exploring space in three generations. From there to global connectivity,...
Last week, I penned an article saying, “This equity rally has no (visible) legs”. Earnings are ok, but nothing to write home about. Rates by the end of the year will likely end up higher than what was priced in by the end of December, a theme which is playing out.
February 2024. A decade ago, geopolitics was something that was almost dismissed as a concern. Time was spent trying to understand and predict the effects of all the extra money that was being pumped into markets. An election here or there wasn’t expected to move the needle outside of a specific country.
February 2024. Following three months of positive asset returns, many concerns which plagued individual investors in 2024 have fallen away.
February 2024. Mentions of AI and Artificial Intelligence on company earnings reports have skyrocketed over the last year. Ever since the release of OpenAI’s ChatGPT site, which is based on the GPT-3.5 and GPT-4 Large Language Models (LLMs), companies have wanted to claim that they are using AI, and are part of the AI revolution. The reality is very few will have the ability to develop AI models by...
The worst bull markets are by far the 'quiet ones'. A period of time when the index rises little by little per day, without any major breakouts and in the absence of a clear narrative. The less investors are convinced, the more excuses why it can’t last, the more persistent the rally gets. This isn’t karma. It’s about flows. The more money stays on the sidelines, the more money will go into markets...
90%. That’s the aggregate probability of a developed market recession this time last year by professional forecasters – yours truly humbly included. Economists often mock Wall Street by saying that it has ‘predicted' nine of the last five recessions. Or the International Monetary Fund (IMF), which hosts a top-line economic think-tank, and central banks all of whom last year saw economic difficulties...
“Countries don’t go bust”, Walter Wriston, Citibank’s president (1967-1984) famously said. Debt defaults are a complex political and social calculation and when they do happen, it is way before a country runs out of natural resources. Yet, of all the economic risks in the next few years, none may be as consequential as the accumulation of debt.
Global equity and bond markets enter 2024 with significant momentum from the last two months of 2023 fuelled by falling inflation and subsequent dovish projections from the US Federal Reserve.
After the Fed’s Dot Plot surprise in December, markets moved fast to price in several rate cuts in 2024. Perhaps a bit too fast? The jury is still out, with the debate raging as to whether the US Federal Reserve will lower interest rates as fast as the markets anticipate (six times this year) or less. I feel compelled to state three obvious points.
2023 was a slow and frustrating recovery train until late October, which then turned into a hypersonic rocket. What looked like a sub-par 2023 turned out to be a blowout in the last two months, in line with the kind of performance we expect following a bad year (2022).
Did the Fed change course? The Market may be asking the wrong question.
December 2023. Given the stock and bond market volatility, it’s hard to know what the starting point for equity valuations and rates as we enter 2024. At the beginning of the year, we said that volatility and geopolitical uncertainty will persist. Stocks and bonds were nearly flat by the end of October and are now up 10% and 5% respectively in just thirty days.
December 2023. Consumption is a key component of any modern society. It accounts for over 65% of GDP and is one of the most important indicators for assessing the health of an economy, with fluctuations in consumer confidence being a key indicator for predicting the speed of a recovery or the depth of a recession.
When we talk about risks, by definition we mean events or developments outside our base scenarios. The following risks are not, thus, our prediction of what will likely happen in 2024. Instead, we focus on how certain areas of politics and the economy may develop adversely enough to disrupt the base-case scenario and lead to different outcomes.
Stock markets continue to rally, performing their usual Christmas song-and-dance aided, presumably, by the tailwinds of more bullish projections around interest rates. A balanced portfolio performance is, as of this morning, roughly in line with what is expected after a bad year.
The correlation between stock and bond returns is a crucial element of asset allocation decisions. When stocks and bonds move in opposite directions, holding both can help reduce portfolio volatility. When they move together, diversification is less effective. Understanding this correlation helps investors build balanced and resilient portfolios.
November 2023. Despite growing calls for a global shift to clean energy, stocks in the sector are significantly underperforming the broader market. In fact, they're some of the worst performers this year.
November 2023. When Russia invaded Ukraine in February 2022, the reaction from markets was swift. Oil prices jumped from $90 per barrel to over $120 in a matter of weeks. Over the next few months, headline inflation reached decade highs in developed countries, pushing central banks to tighten monetary policy at an unprecedented rate.
On 22 November, the Chancellor will be walking the usual tightrope between delivering as much government spending as possible while preserving the state of the nation’s coffers but the constraints that he faces are unusually challenging.
Our Weekly Market update from our Chief Economist, George Lagarias, said: “Stocks have somewhat corrected, and futures traders have very short positions in bonds. There are now many scenarios in which one (or both) of these asset classes stage a rebound… and we should not write off 2023 just yet. September and October are historically the worst months of the year by far. This means that regardless...
Global equities had a volatile quarter, failing to find much conviction and ending down over -2%, albeit broadly flat in Sterling terms given a newfound weakness in the Pound. Bonds also struggled as interest rate expectations continued to grind higher. Index-linked gilts in particular sold off due to their longer maturity profile. Gold was flat for the period, while the cost of oil crept back towards...
“Neither a borrower nor a lender be, for loan both loses itself and friend. And borrowing dulls the edge of husbandry”, says Polonius in Hamlet.
After 18 months of uninterrupted interest rate hikes, most central banks in the developed world have reached or are very close to their interest rate peaks.
October 2023. The US yield curve is now back in the spotlight, with a big deal made of “bear steepeners” and “disinversions”. But what exactly do these terms mean, and how will they affect markets?
October 2023. If you have been reading the economic news over the summer months, you may have noticed that the Chinese economy has been a focus of the financial press. The Economist devoted two covers to this issue while the FT and the WSJ dedicate many long columns to the Asian economy.
October 2023. Making investment decisions is sometimes more of an art than a science, and the mere existence of the Efficient Market Hypothesis tells us that trying to predict market movements is, at the very least, notoriously challenging.
October 2023. When it comes to our emotions, we can honestly say that sometimes they make us a bit irrational, meaning we are more likely to make biased decisions.
October 2023. The Efficient Market Hypothesis (EMH) is an investment theory that states that current stock prices reflect all existing available information, making them fairly valued at any given time.
September 2023. Manias in investing have taken many different forms. The Tulip mania is a famous example, while it could be argued that any price paid for some sort of crypto token that is backed by precisely nothing also amounts to a mania.
September 2023. The number of bankruptcy filings is on the rise, and that may be a good thing.
September 2023. Due to the high correlation with wider Asian economies, South Korea’s trade data tends to be one of the most important economic indicators when it comes to trade.
September 2023. Using asset prices to predict the economy seems counterintuitive at first.
September 2023. A ‘common knowledge’ view I find very interesting is that Japanese interest rates have been so low for so long due to low growth, which has largely been attributed to the country’s demographics.
September 2023. When will the Fed pause? This is the million-dollar question.
September 2023. Businesses must adapt to survive. In this article, Investment Analyst Adam Fisher looks at how some of the world’s largest businesses have adapted to become the leaders they are today.
Despite higher interest rates and persistent (though falling) inflation, global equity markets continued to err on the side of optimism as consumer spending remained strong and company earnings were better than expected. Global equities returned over 6.5% during the second quarter of the year, albeit for unhedged UK-based investors this was tempered by a stronger Pound meaning returns closer to 3%....
Every crisis has a response. In their effort to prevent it from happening again, policymakers put in safeguards and provide incentives for the next bull market. In these policies, we should, usually, seek the seeds of the next crisis. From the biggest potential risks, the Private Equity space is where we would focus.
After the fall of the Soviet Union, the world breathed a profound sigh of relief. Humanity had come close to self-annihilation in 1962, when the US and the Soviet Union threatened to deploy their nuclear arsenal on one another, destroying life on the planet in exchange for control of Cuban airspace.
Join our Chief Economist and Chief Investment Officer for an upcoming live webinar and Q&A session where they will discuss the global economy, markets and the investment landscape.
Webinar details
 | George Lagarias George is Mazars’ Chief Economist and has almost 20 years’ experience in financial markets as an analyst, investment strategist, economist, and fund manager. George is a firm believer that investments should be client-centric and that ideas and perceptions should be placed at a public forum open to all stakeholders. Having joined Mazars in 2016 George has previously worked for British asset managers EFG and Close Brothers as well as Greek private banks Alpha Bank and Eurobank and wealth manager Marfin. George is certified by the Chartered Financial Analyst (CFA) institute with the Investment Management Certificate (Level 4). |
 | David Baker David is Chief Investment Officer and Head of Investments in the UK. David has over 20 years’ experience advising on and managing investment portfolios for a wide variety of clients including private clients, charities, corporates and pension funds. David also works with professional negligence lawyers providing expert witness services, and with regulated firms who are subject to skilled person reviews. In addition, David provides a wide range of investment advisory services to charities and other not-for-profit organisations. David is both a Certified and Chartered Financial Planner and a member of the Chartered Institute for Securities & Investment and the Chartered Insurance Institute. He is Chair of Trustees of a defined benefit pension scheme, and a trustee of an educational charity. David is a passionate believer that private client advice is most effective when financial planning, tax and investment advice is considered in unison. |
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