Imperium Capital Publication

Global Matters Weekly – 12 October 2020

Ipse dixit? No, thanks
by Lorenzo La Posta, CFA

Pythagoras was a clever man: philosopher, cosmologist, musician and mathematician. His famous theorem within Euclidean geometry is one we all learn at school, despite the 2500 years that have now gone by since the man lived. His opinions were so well respected that his disciples across Magna Graecia would appeal to his assertions, rather than to evidence or reason, as a watertight argument. They would simply use the formula “ipse dixit”, literally meaning “he said so”. We, at Momentum, are no Pythagoreans and do not accept dogmatic assertions from anyone, nor do we blindly trust common knowledge. All we trust is evidence and when this is not given to us, the scavenger hunt begins.

Market Snapshot

  • A strong week for global equity markets which returned 3.6%
  • Optimism grows that a US stimulus deal will be reached
  • Brent crude oil rose 9.1% to $42.8 a barrel
  • Gold rose 1.6% to $1930.4 per ounce

Global Matters Weekly – 5 October 2020

The Perfect Storm
by Alex Harvey, CFA

If readers cast their minds back to February this year, they will remember the horror that unfolded on the high seas with dozens of cruise ships being forced to stay at sea as the first wave of Coronavirus took hold. The poster child for the industry was the ‘Diamond Princess’, a Gem-class cruise ship with a capacity of nearly 2700 passengers and 1100 crew, which eventually anchored at Yokohama port in Japan where passengers had to remain on board and self-isolate for several weeks. The world watched on thinking perhaps this would be contained to Asian shores but of course this was wrong as we now know. Global equities would continue to make gains for almost three weeks after the cruise liner had docked before freefalling, only to reach a bottom just over a month after that. Far from plain sailing.

Market Snapshot

  • A relatively strong week for global markets which returned 1.6%
  • President Trump and the First Lady test positive for coronavirus
  • Brent crude fell -6.3% ending the week at $39.3 a barrel
  • Gold rose 2.1% to end the week at $1899.8 an ounce

Global Matters Weekly – 28 September 2020

The long & short of what’s next
by James Klempster, CFA

This week heralds the start of the final quarter of 2020. What an extraordinary year it has been thus far. Of course, for investment managers, the key area to focus on is what next? This question can have multiple different dimensions. For example, the answer might be very different if we are focusing on the long term as opposed to the short term. We have made the point repeatedly that in the long run we will cast this virus off. It remains a truism that the virus is not unpicking the very fabric of society nor is it destroying the functioning of capital markets and as a result, from an investment perspective at least, we will get through this.

Market Snapshot

  • Sell-off in global risk assets
  • Uptick in coronavirus cases hampers service sector
  • Brent crude fell 2.9% to $41.9 a barrel
  • Gold fell 4.6% ending the week at $1861.6 per ounce

Global Matters Weekly – 21 September 2020

Staying out of the rough
by Michael Clough

This year has obviously been far from normal and the Covid pandemic meant the US Open, normally held in June, was pushed back to a late summer week in September. The US Open is regularly dubbed the ‘toughest test in golf’. One of the reasons is long, thick grass (known as rough) which sits unsettlingly closely to the finely manicured fairways, punishing any marginally errant shot. Within equities, growth exposure has been the equivalent of finding the fairway this year, whilst sole exposure to value has been akin to hacking through the deep rough.

Market Snapshot

  • Global Covid-19 infections exceed 30 million with the global death toll approaching 1 million.
  • A mixed week saw global equities ending the week flat
  • Brent crude rose 8.3% to $43.2 a barrel
  • Gold rose 0.5% to 1950.9 per ounce

Global Matters Weekly – 14 September 2020

by Richard Stutley, CFA

Realpolitik is the art of designing policy based on practical rather than ideological considerations: what works, not what we think should work. Pragmatism is an important part of investing and tells us that positioning too aggressively around political events like Brexit and the US election is risky, because both the result and the market outcomes are difficult to predict. Given a low probability of correctly predicting either, we need to see evidence of significant mispricing in order to introduce large positions in our portfolios.

Market Snapshot

  • A mixed week for global equity markets which returned -1.3%
  • Vaccine trials resume after last week’s pause
  • Brent crude fell -6.6% ending the week at $39.8 a barrel
  • Gold rose 0.3% to end the week at $1940.5 an ounce

Global Matters Weekly – 7 September 2020

Yellow metal, green lights
by Andrew Hardy, CFA

Gold has outshone most other investments in 2020, having broken through to new all-time highs in July, surpassing levels last reached nearly 10 years ago. Year to date the bullion price has increased by 27%, trumping all broad equity markets and most other assets – only the tech heavy NASDAQ index has kept pace. Over five years, gold has risen by over 70%. Today’s market and economic conditions go a long way towards justifying these gains though and we remain committed holders within our multi-asset portfolios.

Market Snapshot

  • After their best month since April, US equities fell back last week
  • The CDC in the US has warned health officials to be ready to distribute a vaccine by the 1st November to at-risk individuals
  • Brent crude fell -5.3% ending the week at $42.7 a barrel
  • Gold fell -1.6% to end the week at $1933.9 an ounce

Global Matters Weekly – 24 August 2020

The road map to success
by Stephen Nguyen, CFA

At today’s historically low yield levels, bonds offer significantly less protection and diversification benefit compared to the past. In this new low rate environment, the traditional ‘balanced’ portfolio may no longer be balanced. We spend a lot of time deriving the optimal SAA for our clients. Our optimisation is multi-faceted and goes beyond simply maximising returns for a given amount of risk. We include a wider range of asset classes in our SAA’s to increase the naturally occurring diversification benefits and consider how those asset classes behave in combination with one another. Based on these optimisation metrics, we then generate thousands, sometimes millions, of possible portfolio combinations.

Market Snapshot

  • A mixed picture as global equities returned 0.4% last week
  • Global deaths from Covid-19 surpass 800K
  • Brent crude fell 1.0% ending the week at $44.4 a barrel
  • Gold fell -0.2% to end the week at $1940.5 an ounce

Global Matters Weekly – 17 August 2020

Fast forward 10 years
by Jackson Franks

Former R&B singer and now entrepreneur Akon, announced in January 2020 that his vision to develop Akon City is becoming ever closer to reality. Situated in a small coastal village in the west of Senegal, Akon City will be 100% cryptocurrency based with AKoin (a cryptocurrency established by Akon) at the centre of all transactional life. Although I don’t see the world being run on cryptocurrency anytime soon, I do believe the real estate assets we see today will look and feel very different ten years from now.

Recently, Simon Property Group, a mall operator, announced they are in talks with Amazon about turning their department-store sites into Amazon fulfilment centres.

Market Snapshot

  • The S&P 500 index moved to within 0.2% of its all-time high in February
  • Russia announced regulatory approval for a vaccine – the first country to do so
  • Brent crude rose 0.9% ending the week at $44.8 a barrel
  • Gold fell -4.4% to end the week at $1945.1 an ounce

Global Matters Weekly – 10 August 2020

Safe Hands for Troubled Times
by Robert White, CFA

In a world where unprecedented events seem to be happening with regular occurrence, it is more important than ever to find stewards of capital with the talent, temperament and expertise to navigate through such uncertain times. This is no easy task and recent studies have reminded us that past performance in isolation is not a sufficient guide. Here at Momentum, we believe the key lies in thorough due diligence backed by an experienced and independent research team.

Market Snapshot

  • The tech rift between the US and China intensified last week.
  • A positive week for markets as global equities rose 2.2%.
  • Brent crude rose 2.5% ending the week at $44.4 a barrel.
  • Gold rose 3.0% to $2035.5 an ounce

Global Matters Weekly – 3 August 2020

Spaghetti Western
by Lorenzo La Posta

“Year 1862: amid the chaos of the American Civil War, the three gunslingers Blondie, Angel Eyes and Tuco (a.k.a. the Good, the Bad and the Ugly) are competing to put their hands on a buried cache of gold, but onl– “…wait! I got it wrong. It was something like: “Year 2020: amid the chaos of a global pandemic, some industries thrive (the Good) as others go through a rough patch (the Bad), while countries, economies and societies strive to recover from their wounds (the Ugly)”. This year, the outcomes have been more extreme than most Hollywood creations. Let’s just hope there will be no sequel to this tragic period.

Market Snapshot

  • The US Dollar had its worst month for a decade
  • Moderna has begun its late-stage vaccine trial on 30,000 people in the US
  • Brent crude fell -0.1% ending the week at $43.3 a barrel
  • Gold rose 3.9% to end the week at an all-time high of $1975.9 an ounce