Emerging Markets Trends: What’s Negative for One Market May Boost Another

Emerging Markets Trends: What’s Negative for One Market May Boost Another

Economic conditions have continued to deteriorate in emerging markets, and corporate earnings forecasts have fallen. Overall, emerging markets were down 4.3% in the third quarter, underperforming the developed world.1 In the midst of this negative news, however, we’re seeing a few bright spots start to emerge, and we’ve been able to add holdings that, in our view, became mispriced during market volatility.

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Addressing the No. 1 Question I Hear About Alternatives

Addressing the No. 1 Question I Hear About Alternatives

“Are alternative investments appropriate for individual investors?”

That’s a common question I’ve seen in the press and it’s a question I’ve often been asked when I speak at conferences. I think the subtext to that question is twofold:

1) It reflects concern that alternatives are too complex for investors.

2) It questions whether investors really need alternatives.

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Not All Market Hedges Are Created Equal: Part 2

Not All Market Hedges Are Created Equal: Part 2

As discussed in my first blog in this series, there is a compelling case for using volatility as a market hedge. While volatility is not an investable asset, investors can access volatility indirectly through futures or options on the CBOE Volatility Index® (VIX). VIX futures, if properly used, may serve as a short-term market hedge.

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How Government Corruption Crackdown, Student Protests Shape Our View of China

How Government Corruption Crackdown, Student Protests Shape Our View of China

We believe the Chinese government’s crackdown on corruption has had the unintended consequence of lower economic growth, as evidenced by a reduction in discretionary spending, including at luxury retailers and Macau gaming operators.

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Worried About the Unknown? Focus on the Business Cycle Instead

Worried About the Unknown? Focus on the Business Cycle Instead

Lately, I’ve been fielding questions about the possible “unknowns” that could bring about the end of the current economic expansion. While I understand investors’ trepidation about the unknown, I believe this concern is misplaced. Business cycles do not generally end because of unforeseen accidents. They normally end because central banks, in an effort to bring down inflation, raise interest rates, which creates an inverted yield curve and slows money and credit growth. We are clearly a long way from this scenario at present. That is why I have argued over the past two to three years that this business cycle expansion will be one of the longest on record.

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Is Russia’s Credit Rating Heading for Junk Status?

Is Russia’s Credit Rating Heading for Junk Status?

On Oct. 17, Moody’s Investors Service cut Russia’s ratings to Baa2 from Baa1, leaving a negative outlook. While this action brings Russia’s ratings more in line with other rating agencies (Standard & Poor’s and Fitch Ratings currently rate the country at BBB- and BBB, respectively), there is a chance that there might be more catching up to do soon on the country’s credit ratings.

That’s because S&P is scheduled to release a rating decision on Russia as soon as Friday, Oct. 24. Since S&P already rates Russia’s credit as BBB-, with a negative outlook, a potential downgrade would bring Russia’s ratings to junk status.

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