Trends Watch: September 8, 2016
Investors are starving for quality managers. However, the only position
a quality manager can be in at the moment is to have one foot out the door and keep their position size small enough to be nimble. This all equates to the current paradox of quality managers under- performing until the dislocations cease. Glorious headlines of market highs and low unemployment built on a foundation of gimmicks during an election year is not reality. When it stops the quality managers will be recognized quite quickly and investors will have clarity.
The EU risks fracturing completely. EU banks are guessing at what will occur as UK banks start their exit process. Negative rates along with a flat (and declining) yield curve have all EU banks preparing for the worst. The EU must have a set of protocols put in place for when the next referendum occurs. Currently the only thing the EU has provided banks with is uncertainty.
The distortions that we are witnessing in financial markets around the world due to central bank interventions. Central banks embarked on a journey and they refuse to turn back no matter how much it proves to be useless. The further the limits get pushed the worse the reversion to reality will be when it occurs.