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Global Matters Weekly – Macro Matters

When I raise the issue of the importance of macro, I tend to get the same responses, which fall into two categories:

  1. It can’t be done; no one has a good record predicting macroeconomic variables like GDP growth.
  2. Why bother? Even if you had perfect foresight of what these variables were going to be, you wouldn’t be able to predict the market’s reaction.
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Global Matters Weekly – Be smart, be decent: empower women

I think we, as human species, have proved how advanced and smart we are in many ways: we have sent people into space, observed the smallest atoms, cured diseases and invented pizza. Yet, many people still fall foul of one of the most extreme idiocies: sexism. There is no justifiable or objective reason behind the discrimination based on the absence (or presence) of the Y chromosome, so, in a world of cognitive human beings, such a thing should not exist at all. Yet it does, and I can’t really understand why, because gender discrimination is not only terribly wrong, but also plain stupid.

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Viewpoint – April 2021

The pandemic continued to dominate discourse in April as case numbers globally reached record daily levels, but the impact became increasingly differentiated between the developed world, where the vaccine roll-out is bringing herd immunity and the end of lockdowns and movement restrictions into sight, and developing nations, notably India and Brazil, where second waves have spread rapidly with devastating effect and vaccine roll-out is trailing badly. However, the global dominance in both GDP and stock market capitalisation of the developed world together with China, which was the earliest economy to rebound from the pandemic, has underpinned growing confidence in recovery and the prospects for equity markets.

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Global Matters Weekly – ESG: Don’t be a spectator

Environmental, Social and Governance (ESG) investing is at the forefront of most investors’ minds and the real estate sector is no exception. A survey published by Bentall Kennedy, Real Property Association of Canada (REALPAC) and the United Nations Environment Programme Finance Initiative (UNEP FI), which included investment managers representing over $1 trillion in assets under management from North America, Europe, and the Asia-Pacific region found that 93% of investors include ESG criteria in real estate investment decisions. At Momentum we are no different.

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Global Matters Weekly – Relationship Problems

With the US election now just two weeks away, investors are busy forming expectations on the result and looking at the potential policy implications of either a Biden or Trump victory. While there is plenty of short term focus on the eventual shape of any additional stimulus package to emerge from Congress, perhaps the most important issue for long term investors will be how US-China relations develop from here. For those wanting a detailed outline of our thinking on this issue, we have recently published a thought piece in addition to this week’s blog which is available here.

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Global Matters Weekly – Ipse dixit? No, thanks

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.

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Global Matters Weekly – The Perfect Storm

TIf 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.

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Insight – Harmony Cautious Income fund downside protection in September while still paying 4% pa income

The key thing I’d highlight this month is actually the downside protection – Cautious Income is down 2.2% from the recent peak in early September vs a 7.8% fall for the S&P 500 and 9.4% for both the Nasdaq and FANG+ indices (not saying they deserve to be compared but many have done so whilst tech was going up!).

Yes MSCI World is flat year to date (to the 25th unlike data below), but we know that has been almost entirely driven by the performance of the mega cap growth / tech stocks which we naturally do not have much exposure to in the Cautious Income fund, given they pay little to no income.

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Global Matters Weekly – The long & short of what’s next

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.

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Viewpoint – September 2020

The pattern of market performance since the March lows continued unabated in August: global equities strong, led by the US and within that tech stocks; high yield bonds, emerging market debt and convertible bonds outperforming safe haven government bonds; inflation protected bonds performing well; precious metals strong; and the dollar weak. The S&P 500, with a 7% rise, reached new all-time highs, dragging the MSCI World index to a new high, despite many of its other constituents remaining well below previous peaks. Within markets, tech stocks and other winners from the pandemic continued to forge ahead, the NASDAQ index rising 10% to new highs, while sectors most exposed to the damages wrought by Covid, including financials, real estate and leisure, continued to suffer.

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