It’s lights out and away we go
by Matt Connor
The first race of the 2022 Formula One season didn’t disappoint, as Sir Lewis Hamilton sought a strong start to his record-breaking 8th World Championship in Bahrain. Many were quick to write off the Mercedes man, due to a lack of pace in free practice and qualifying compared to rivals Ferrari and Red Bull. Despite the negative outlook, Hamilton still managed to achieve a podium. As value investors we often view negative sentiment around a company as a potential opportunity to capitalise on irrational valuations
Market Snapshot
- Global equities increased by +1.3% last week
- At the NATO summit, leaders said in their statement that the Russian use of chemical or biological weapons would result in severe consequences
- Brent crude increased by +11.8% to $97.9 a barrel
- Gold increased by +1.9% to $1889.3 per ounce
“There are decades where nothing happens; and there are weeks where decades happen.” Lenin
The quote is attributed to Lenin shortly before the Russian revolution. The week which started on February 24th, when Russia invaded Ukraine, is one of those weeks. Russia’s aggression and the unfolding humanitarian disaster have shaken the West to its core. The self-indulgent complacency spanning three decades since the fall of the Berlin Wall and the break-up of the Soviet Union has hit the brick wall of an existential threat to the liberal order of the democratic free World.
Metaverse: real estate
by Jackson Franks
The largest ever land acquisition took place towards the end of last year; it’s value:US$2,400,000. You may be thinking I’m missing a few zeros here, but what I haven’t yet mentioned is that this transaction does not relate to the real world but instead refers to Tokens.com’s purchase within the metaverse.
In November last year, Tokens.com’s subsidiary, Metaverse Group, paid more than US$2.4m for a plot of virtual land in the fashion district of Decentraland, one of several growing platforms within the metaverse. Although this amount may seem obscene to many readers (including myself), the more eye-catching fact here is that it accounted for less than 50bps of real estate sales within the metaverse for 2021
Market Snapshot
- Global equities rose +6.0% last week
- The Fed raised interest rates by 25 basis points ending the near-zero rates of the pandemic era
- Brent crude fell -4.2% over the week to $107.9 a barrel
- Gold returned -3.4% to $1921.6 per ounce
Mind the Gap
by Mark Wright, CFA
The latest elevated CPI print of 7.5% has spooked investors this year, triggering volatility in both bond and equity markets. In trying times, it sometimes helps to take the long view. In a recent paper the Bank of England has taken this advice to the extreme, looking back 800 years to the 14th century to calculate the average global GDP-weighted inflation rate of just 1.51%1. Unfortunately, 800 years is not a particularly sensible investment horizon for most people, but there are plenty of other more relevant periods for us to examine when considering the importance of current economic events
Market Snapshot
- Global equities declined -1.9% last week
- The Russian invasion continues with 2.5M Ukrainians having fled the country
- Brent crude fell -4.6% to 118.11 a barrel, and the USA banned oil imports from Russia
- Gold gained +0.9% to $1970.7 per ounce
Goodbye to Greenwashers
by Michael Clough, CFA
“For fund selectors the key questions are: who is genuine and how do they stack up versus a burgeoning list of peers?”
Market Snapshot
- Global equities fell -2.8% in a turbulent week for world markets
- President Vladimir Putin announced that the war will continue until Ukraine accepts his demands and halts resistance, dimming hopes for a negotiated settlement
- Brent crude rose +20.6% to $118.1 a barrel
- Gold rose +4.3% to $1970.7 per ounce
Style Box
by Tom Delic
“Boxing styles will ultimately determine how exciting a fight is. This is not too dissimilar to investment styles, where some work better together than others. “
Market Snapshot
- Global equities fell -0.1% last week
- Last week saw major developments in Ukraine with Russia launching a full-scale invasion of the country. Western governments have moved to place various sanctions on Russia
- Brent crude returned +4.7% over the week to $97.9 a barrel
- Gold returned -0.5% to $1889.3 per ounce
Markets suffered a severe jolt in the early weeks of the new year. Bond yields rose sharply, and Wall Street suffered its steepest drop since the pandemic crash of March 2020. The S&P 500 fell by close to 10% from its all-time high recorded on 3rd January before a late rally reduced the loss for the month to 5.2%. Most other equity markets were dragged down with similarly large declines, but there were notable exceptions; some emerging markets benefitted from strength in commodity markets, notably oil, up +17% in January, while the UK market delivered a positive return, up +1.6% in GBP terms. UK equities have underperformed substantially in recent years, held back by an especially steep drop in economic activity during the pandemic, and by a high weighting in energy, commodity and financial stocks, representing 40% of the index, and seen by many investors as long term laggards. January saw a sharp reversal in these trends, with the UK emerging from the pandemic earlier and more robustly than other major economies, oil and mining shares enjoying a strong tail wind from commodity price rises, and financials responding to the prospect of higher interest rates, leading to improved margins and earnings.
Taking the (not so) long view
by Robert White, CFA
“While investors cannot control their natural behavioural instincts, we should focus on what we can control. “
Market Snapshot
- Global equities fell -1.8% last week
- The ongoing geopolitical tensions and the move to price in additional rate hikes led to further declines in equities
- Brent crude returned -1.0% over the week to $93.5 a barrel
- Gold returned 2.1% to $1898.4 per ounce
The Boutique Premium
by Gary Moglione
“The one area in which bigger certainly may not be better is performance”
Market Snapshot
- Global equities fell -0.7% last week
- President Biden yesterday spoke with Ukraine leader Volodymyr Zelenskiy and promised to act “swiftly” in the event of Russian aggression
- Brent crude rose +1.3% to $94.44 a barrel, an eight-week rally, over concerns that Russian energy supplies could be disrupted by a Ukrainian invasion
- Gold increased by +2.8% to $1858.76
Stay Ahead of the Game
by Richard Parfect
“We are all influenced heavily by what we experienced in childhood – the knocks leave their marks.”
Market Snapshot
- Global equities rallied +1.9% last week
- US labour surprised despite rising Covid cases
- Brent crude rose +3.6% to $90.0 a barrel
- Gold rose +0.9% to $ 1791.5.
