Central banks get serious
by Robert White, CFA
After the first 50bps interest rate rise by the Fed in over 20 years (with more to come) and the announcement of quantitative tightening starting in June, there is no doubt that the Fed is getting serious about containing inflation. Inflation data in April continued the pattern of the past year, generally exceeding expectations, with price rises becoming more broadly based and accelerating to multi-decade highs in the US and Europe.
Strong demand, supply chain shortages, and war in Ukraine have combined to push producer price inflation (PPI) in the US up by 11.2% in the year to March
- Global equities fell 1.1% last week.
- Most indices saw declines after a volatile week with interest rates and inflation fears weighing on sentiment.
- Brent crude rose 2.8% to $112.4 a barrel following an EU proposal to ban Russian imports.
- Gold fell 0.7% to $1883.8 per ounce
by Stephen Nguyen, CFA
As an avid sports fan, I have always enjoyed being involved in all things sports related. Having participated in various team-based and individual sports throughout my life, I of course enjoy watching a variety of different sports, be it golf, tennis, or football. Sporting events often bring people together and teach us the importance of values and hard work. If we look at successful sports teams or individuals, there are lots of similarities that can be drawn between them and professional investors
- Global equities declined 2.6% last week
- Lockdown restrictions widen in China as concerns escalate in the capital Beijing
- Brent crude fell 4.5% to 1067 a barrel amid concerns about China’s demand and after Libya said it would resume output at its closed fields in the coming days
- Gold fell by 0.2% to $1,931.6 per ounce
Whatever it takes, China
by Lorenzo La Posta, CFA
This is not the first time I have written about Chinese equities and loyal readers will remember last August, when the media were calling it an “uninvestable” market, we were finding pockets of value and interesting opportunities. This year, a new wind is blowing under the Red Dragon’s wings.
But let’s rewind the tape and press play on February 2021. Valentine’s Day had just gone, the stock market was at a peak, but no one knew what was coming
- Global equities fell -1.4% last week
- President Macron is set to face far-right rival Marine Le Pen in the second and final stage of the French presidential election in two weeks’ time
- Brent crude fell -1.5% over the week to $102.8 a barrel
- Gold returned +1.1% to $1947.5 per ounce
by Alex Harvey, CFA
Covid travel restrictions have now finally been lifted for passengers arriving in the UK. I’ve been fortunate to travel abroad in recent months including a trip to Jordan, with its rich cultural heritage spanning ancient civilisations and sites sacred to Christianity, Judaism and Islam. One regional constant over the millennia has been the Dead Sea; the world’s deepest hypersaline lake. Its shores emerge from a depth of over 300m to mark the lowest land elevation on our planet at 430 metres below sea level
- Global equities increased by +0.3% last week.
- Russian and Ukrainian negotiators will resume remote talks today.
- Brent crude decreased by -13.5% to $104.39 a barrel on plans for a release of US reserves.
- Gold decreased by -1.7% to $1925.68 per ounce
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
- 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
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
- 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
- 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?”
- 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
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. “
- 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
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. “
- 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