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ARP Observations

In this section, we provide some thoughts on events and developments that are shaping the world and informing our investment advice and strategies.

Recent
25
July 2024
Faster than a Speeding Bullet
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Joe Biden has dropped out of the US presidential election. The most likely candidate by far to get the Democratic nomination is Kamala Harris and she has already been endorsed by many Democrats including some potential opponents. The key questions now are how does this change the race and can she win?
15
July 2024
An Assassination Attempt: An Attack on Democracy
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Saturday's assassination attempt on former US president Donald Trump was an attack on democracy. No matter your political views, nobody has the right to take matters into their own hands.
5
December 2022
Globalisation 2.0 in the Context of Putin
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Putin’s war in Ukraine has changed the dynamics of globalisation. New alliances are being created, and the West cannot assume normal trading patterns will resume after the war. The desire to reduce the reliance on the rich countries is too powerful in many EM countries for that to happen.
12
July 2022
The Canary in the Coal Mine?
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Sri Lanka is in dire straits, and investors in our part of the world are advised not to ignore it. European countries won’t necessarily undergo exactly the same problems, but less can also inflict serious damage. Going into the second half of 2022, we fear a recession is approaching, and we urge you to be cautious.
28
April 2022
An A to Z of impact investments
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Investors far too often consider impact investing and ESG (Environmental, Social and Governance) investing as being synonymous. There are similarities between the two investment styles, but they should not be conflated. Read to find out the differences between impact and ESG and the characteristics of impact investing.
25
March 2022
A new era of globalisation
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Is the emergence of a new megatrend coming? The Covid-19 pandemic as well as the Russian invasion of Ukraine and other factors are both playing their part in accelerating a shift towards a new era of globalisation.
6
December 2021
The revival of distressed debt and special situations
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With the accommodative policies and government support that kept a number of "zombie" companies afloat over the last 18 months expected to be removed in the near future, could we see the revival of opportunities in distressed debt and special situations markets?
26
November 2021
India becoming the next China
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Why India could be a good investment opportunity now and for years to come, and possibly take China’s place in the “too big to avoid” conversations.
20
May 2021
Climate Change- from Risk to Opportunity
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Climate risk is unquestionably one of the largest risks facing humanity. Turn it on its head, though, and the severity of climate risk is paving the way for some of the greatest investment and impact opportunities in the decades to come.
25
September 2020
Inflation or Recession? Take Your Pick
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We firmly believe the coming winter will be rather gloomy from an economic point of view. However, even if we are overly pessimistic, there are reasons why you have to be careful. Here is why.
19
May 2020
Egg on Your Face?
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Precisely one year ago – on the 20th May 2019 to be more precise – the S&P 500 closed at 2,840.23. Those were happy days.
14
January 2020
Share of top 5 companies in the S&P 500
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Is this a warning sign?
17
December 2019
Secular Stagnation spreading to EM
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For long, we have expected GDP growth to slow quite dramatically within the OECD and, at least so far, we have been spot on. Anecdotal evidence is growing that the disease is spreading to emerging markets.
12
November 2019
Brexit - What’s Next?
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Our review of the outlook on the UK economy given the latest Brexit developments
31
October 2019
The reliance on multiples in equity performance.
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Multiple expansion, namely rising price-to-earnings ratios, have been the principal contributor to global equity performance in 2019.
4
September 2019
Extraordinary Times
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Just as we thought the situation here in the UK around Brexit couldn’t get any messier, look what happened yesterday (3rd September).
20
March 2019
Why the Baby Boomers could make it difficult for equity investors
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Experience from the U.S. has taught us that, as people age, they gradually switch from equities to income-generating investment vehicles (in the past, mostly bonds). Eventually, as they age further, they become net sellers of both equities and bonds. Given the substantial amount of capital controlled by baby boomers (see below) that could put further pressure on equities (and, eventually, also on bonds) in the years to come.
16
January 2019
Brexit - What Now?
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Having just been defeated in Parliament, Theresa May has only a few days now to sketch out plan B, which she must present to Parliament by Monday the 21st January. The big question is therefore: What will happen next?
15
January 2019
Debt "Hotspots"
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The world is now $62 trillion more indebted than at the time of the Lehman collapse, and many of the new debt “hotspots” are in Europe.
3
December 2018
Brexit at 23:58
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With the vote in Parliament coming up and the exit date now less than four months away, the stakes are getting higher and higher. See here why a hard Brexit - i.e. no agreement - is the worst of all possible outcomes.
29
June 2018
UK Longevity in Decline
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With UK longevity in decline since 2011, one can no longer argue it is just a blip on the curve, but what is really going on? Is it a function of lifestyle, or is it a function of the UK government having cut back on NHS – at least in real terms? We are looking into this, as the ramifications are widespread.
6
March 2018
BofAML’s Bull & Bear Indicator
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Following the sudden spike in volatility in late January and early February, many investors expected the change in fortunes to be longer lasting, but markets have been remarkably calm since. In fact, so calm that investor sentiment is now extremely bullish – a classic warning signal that investors should be wary.
30
January 2018
The Mother of All Bubbles?
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Over the centuries, many bubbles have played havoc with people’s lives, but rarely – if ever – have we seen a bubble as big as Bitcoin. Having dropped almost 50% from its peak, one wonders whether the meltdown has already commenced? Alternatively, could it possibly be a blip on the curve, only for Bitcoin to go much higher? For what it is the worth, I think Bitcoin will ultimately go to zero, but that doesn’t mean it couldn’t appreciate further in the short term.
22
November 2017
Brexit, our latest view
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The latest language in the current round of Brexit negotiations is becoming increasingly emotional, fuelled by nationalist press on both sides. This has made deciphering fact from fiction for the general populous almost impossible. The import/export debate is a case in point. In this latest Observation we highlight some facts worth remembering!
8
September 2017
Bond yields vs. the global economic cycle
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Bond yields diverging from the economic cycle is a post-crisis phenomenon, and now it is happening again. Will bond yields pick up or is the economy finally slowing?
20
June 2017
Protectionism on the Rise
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The EU and US combined have hugely increased the number of protectionist policies in place in recent years. This is not conducive to global growth; in fact it is outright obstructive to it . . .
14
June 2017
Labour’s demographic problem
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Demographics will make it increasingly difficult for Labour to gain power in the UK.
8
June 2017
GDP needs (reasonably) cheap energy
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Economically, nothing is more important than energy. Industry would die virtually overnight.
26
May 2017
US debt levels are in (relatively) good shape
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Despite all the negativism towards the US economy and its supposedly vast amounts of debt, the reality is very different. The absolute numbers look big, but that is because the economy is so big. On a relative basis (as % of GDP) the debt problem in the US is small compared to many other economies.
5
May 2017
Market apathy?
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Are equity markets reflecting today’s systemic risks? Proceed with caution . . .
29
March 2017
Confidence Trick
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US consumers are feeling rosy right now. Could this be the peak though?
29
March 2017
The Untied Kingdom
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Should Scotland's First Minister seek a second referendum, as she now has authority to do, can Scotland afford it?
7
March 2017
Mind the Gap
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US Economic Growth - the gap between hope and reality widens
20
February 2017
Year of the Alpha
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At Absolute Return Partners we distinguish between four types of risk – beta, alpha, gamma and credit risk. Alpha risk is the contentious one. There is more than one way to think of alpha risk.
3
February 2017
Trump Pie
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Trump’s promise to the American populace that he can deliver 3.5-4.5% annual GDP growth consistently is a pie in the sky.
1
February 2017
All change at the next nation
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With 2017 well underway, one concerning factor stands out above everything else, and that is what is usually classified as growing nationalism. I am not convinced that the true driver is just growing nationalism.
8
November 2016
Change is coming
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Fund managers are going to struggle to perform sudden miracles and deliver outsized returns in the prevailing low return environment. So, it is fees that make a significant difference to the bottom line.
11
July 2016
The Empire Strikes Back(wards) – Now what?
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Democracy has been served. Brussels and London (or at least the elite in those cities) have received a slap in the face.