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Global Matters Weekly – DiversiChination

Last year, US Treasuries suffered one of their worst years this century. Treasury Inflation-Protected Securities (TIPS), on the other hand, returned +6%, making 2021 a pretty good year for these bonds versus their long-term average. So how did investors like us make money in TIPS; was it purely down to QE-fuelled irrational behaviour; and what do we expect from here?

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Viewpoint – December 2021

Two years ago, news began to emerge of a cluster of pneumonia type sickness in China, soon to be identified as a novel coronavirus. In early January 2020 the WHO reported no evidence of significant human-to-human transmission. Within days it became clear that China saw things very differently, when it forced the 11 million people of Wuhan into a strict lockdown. The rest is history, but few of us then anticipated that as we entered 2022 the pandemic would still be raging, at record case numbers globally of over two million per day. Even fewer would have predicted that in those ensuing two years global equity markets, as measured by the MSCI World index, would return over 40%.

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Global Matters Weekly – Making money in bonds

Last year, US Treasuries suffered one of their worst years this century. Treasury Inflation-Protected Securities (TIPS), on the other hand, returned +6%, making 2021 a pretty good year for these bonds versus their long-term average. So how did investors like us make money in TIPS; was it purely down to QE-fuelled irrational behaviour; and what do we expect from here?

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Global Matters Weekly – Turning the corner?

Happy New Year to all our readers. As we enter the third year of the Covid-19 pandemic, uncertainty remains elevated in financial markets, largely centred on further Covid variants and the prospect of tighter monetary policy. Markets have largely brushed off these concerns of late and have come a long way since the lows of 2020.
As equity markets continue to rise and reach new highs, valuations across many developed equity markets are looking stretched and it is becoming increasingly difficult for investors to find value. While many markets appear expensive, we believe there are opportunities to which investors should pay attention: one of those being Japan.

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Global Matters Weekly – Staying the Course

As we come into 2021’s home straight, few moments can match the drama and rivalry that played out yesterday in Abu Dhabi as the Formula One season drew to a close. A nail-biting final lap decided the 2021 championship after the two key protagonists, Lewis Hamilton and Max Verstappen, started the race on equal points. Even those not of a petrolhead persuasion would be hard pushed not to have enjoyed the spectacle. The lesson of the day was to never give up. In the highly competitive sports arena, we’ve seen countless times how victory can be snatched from the jaws of defeat. Whilst investment is a different game altogether, similarities can be drawn between our industry and theirs.

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Viewpoint – November 2021

The buoyant markets of October continued through most of November, taking several equity indices to new all-time highs, until news of the new Covid variant, Omicron, at the end of the month reverberated globally and sent equity markets into their sharpest one-day falls of 2021, pushing all major markets into negative territory for the month.

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Global Matters Weekly – Death of the traditional retailer or just poor operators?

The last decade or so has seen traditional retail undergo a structural change. Rapid growth of e-commerce, everchanging consumer habits and increasing competition have all been cited as culprits responsible for the ‘death of the high street’, but the real culprit is bad management.

The onslaught of the pandemic last year witnessed the highest number of store closures in the UK since the global financial crisis, taking down household names such as Debenhams and Topshop’s parent company Arcadia Group in its wake. The pandemic isn’t wholly to blame for the failure of these businesses though, it was more of an accelerant, bringing forward the eventual demise of these badly run businesses.

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Global Matters Weekly – Opt Out

It is hard to know what is going to happen. While people like to hear a single view about the outlook for the global economy, with plenty of point forecasts for key variables like growth and inflation, the future is in fact best expressed as a range of possible outcomes; see my colleague Lorenzo La Posta’s blog from two week’s ago (“Embracing Uncertainty”) for a good explanation of what this looks like in practice.

If something is hard, most of us would like to opt out. One way to do this is by investing in secular growth stories: no matter which way the wind is blowing for the wider economy, these businesses continue to do well as they take market share from other areas and come to account for a growing proportion of spending.

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Global Matters Weekly – Gradually and then Suddenly

Spotting dangers and threats can be a difficult skill; not least because they often hide in plain sight. The physical act of literally seeing a danger can require a deliberate act of searching it out. For example an object such as a car or aircraft you are on a collision course with is often masked by the fact that the relative angle between you is constant, thereby it appears stationary. If the eye does not detect an angular change then it can be literally blind to it until the final moments before impact when its relative size in your field of view blooms to a large size, at which point evasive action can be too late. It is due to this optical phenomenon that to spot the danger we need to move our head around in our scan to create an angular change for the eye to spot.

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Global Matters Weekly – Embracing Uncertainty

Today, uncertainty takes many forms. It revolves around inflation, supply chains, energy prices, interest rates, wages, growth and more. Is the current bout of inflation more than transitory, or will inflation indicators turn down towards the widely used 2% target any time soon? When will disruptions to global trade end? Will labour
shortages and raw material supplies come back to normal? Is there such a thing as ‘normal’ anymore, or are we heading towards a ‘new normal’?

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