12 April 2021
“I don’t have opinions about things I know nothing about.” - Prins Philip
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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15 March 2021
"Out of difficulties grow miracles." - Jean de la Bruyère
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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15 February 2021
"Great things are done by a series of small things brought together." - Vincent van Gogh
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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25 January 2021
"It’s what you learn after you know it all that counts" - Earl Weaver
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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14 December 2020
"Nothing is more noble, nothing more venerable, than loyalty." - Marcus Tullius Cicero
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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23 November 2020
"It is the mark of an educated mind to be able to entertain a thought without accepting it." - Aristotle
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective |
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2 November 2020
Storms make the oak grow deeper roots.” - George Herbert
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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19 October 2020
“Life is what happens to you while you’re busy making other plans.” - John Lennon
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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5 October 2020
"Do the best until you know better. Then when you know better, do better." - Maya Angelou
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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21 September 2020
"It is always the simple that produce the marvelous." - Amelia Huddleston Barr
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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7 September 2020
"Doing the best at this moment puts you in the best place for the next moment." Oprah Winfrey
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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17 August 2020
"The difference between ordinary and extraordinary is that little extra." - Jimmy Johnson
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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27 July 2020
“You are lost the instant you know what the result will be.” - Juan Gris
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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13 JULY 2020
“The best qualification of a prophet is to have a good memory.” - George Savile
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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22 JUNE 2020
“The noblest pleasure is the joy of understanding.” - Leonardo da Vinci.
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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8 JUNE 2020
“The whole is more than the sum of its parts.” – Aristotle
Read Fund Manager Gerrit Smit’s latest Global Equity Perspective
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25 MAY 2020
US institutional investor confidence is currently at historic low levels, two standard deviations away
from the average.
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11 MAY 2020
“One cannot develop an effective philosophy without having been exposed to life’s lessons.” - Howard Marks
Read Fund Manger Gerrit Smit’s latest Global Equity Perspective.
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20 APRIL 2020
“Well bought is half sold.” - Howard Marks
Read Fund Manger Gerrit Smit’s latest Global Equity Perspective.
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6 APRIL 2020
“You can’t predict. You can prepare.” - Howard Marks
Read Fund Manger Gerrit Smit’s latest Global Equity Perspective.
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16 MARCH 2020
“Patience is bitter, but its fruit is sweet.” - Aristotle
Read Fund Manger Gerrit Smit’s latest Global Equity Perspective.
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3 March 2020
Contrary to earlier hopes, coronavirus is spreading through the world with infections now on all continents.
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10 February 2020
“Wonder is the beginning of wisdom.” Socrates
Read Fund Manger Gerrit Smit’s latest Global Equity Perspectives
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11 FEBRUARY 2019
“The aim of the wise is not to secure pleasure, but to avoid pain” Aristotle
Even though industrial production makes up less than a fifth of the US economy, its higher volatility causes disproportional sensitivity in capital markets.
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28 JANUARY 2019
“The more I live, the more I regret how little I know” Claude Monet
We monitor several indices reflecting general capital market conditions. Each one considers the sponsor’s perceptions of the capital market environment, including stresses in the financial system.
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14 JANUARY 2019
“He who can no longer pause to wonder and stand rapt in awe, is as good as dead.” Albert Einstein
Investors start a new calendar year with a theme of global moderation in the economic outlook following the very volatile markets at the close of last year. The big question is whether the market discounts the outlook deteriorating more aggressively than earlier perceptions.
US confidence indices are starting to roll over from elevated levels. It is still too early to confirm a negative trend, but odds seem high to be the case. This has historically started years before a recession, and we can on this basis therefore not yet forecast an imminent recession.
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17 DECEMBER 2018
“He who in contented is rich.” Laozi
With the volatile US stock market, it is prudent to continue closely monitoring its economic fundamental outlook as this year closes.
The current economic indicator in the above chart remains stable. The most recent reading of the trusted leading economic index of ten economic indicators has dropped from the previous peak level but is still at an elevated level. The spread between the two series (see the bottom section of the chart) is also at an elevated level. This spread traditionally went negative more than two years before the respective recessions.
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19 NOVEMBER 2018
“It’s not that I am so smart, I just stay with problems longer.” Albert Einstein
It is our impression that we would need a relatively high probability of an imminent US recession to fear the formation of a bear market in equities and therefore a structural peak in share prices.
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29 OCTOBER 2018
“If you can’t explain it simply, you don’t understand it well enough.” Albert Einstein
The weak stock market performance over the past few weeks has brought it close to an official correction level of -10%.
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1 OCTOBER 2018
“What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience.” Adam Smith
We continue to believe that the most important fundamental issue for the health of global financial markets is the outlook for the US economy.
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10 SEPTEMBER 2018
GLOBAL MARKETS: The most important issue for the global capital markets remains the health of the US economy.
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27 AUGUST 2018
“Tomorrow belongs to those who can hear it coming.” David Bowie
Somewhat surprisingly the end of July reading for the leading economic indicator ticked up again. Whilst the PMI index dropped a notch, it is still at elevated levels. The combination of these two readings provides continued confidence in the US economy.
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13 AUGUST 2018
“Difficulties strengthen the mind, as labour does the body.” Seneca
US ECONOMY: We keep monitoring US economic indicators to form an opinion of the level of risk for an upcoming recession, and therefore for a potential peak in share prices: US – Conference Board Leading Economic Index & Goldman Sachs Current Economic Activity Indictor vs S&P 500
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23 JULY 2018
“He who is brave is free.” Seneca
Most leading US economic indicators are currently at historically elevated levels, with some seemingly in a process of peaking and rolling over. Headlines of ‘this is as good as it gets’ may well be expected.
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18 JUNE 2018
Investors are reflecting on a combination of potent recent geopolitical events. The G7 summit ended in acrimony, the Singapore summit seems to hold promise of more peace in Asia and immediately afterwards more threats of a trade war between the US and China materialised.
These are confusing circumstances for decision making, but fortunately investors are better guided by economic fundamental indicators. To read more please click to download
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28TH MAY 2018
“Luck is what happens when preparation meets opportunity.” Seneca the Younger
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14 MAY 2018
“There are more things that frighten us than injure us, and we suffer more in imagination than in reality.” Seneca the Younger
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23 APRIL 2018
It is useful to constantly follow economic indicators to assess whether the fundamental economic outlook stays constructive.
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27th January 2020
“I cannot teach anybody anything, I can only make them think.” - Socrates
Read Fund Manger Gerrit Smit’s latest Global Equity Perspectives
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13th January 2020
“To a mind that is still the whole universe surrenders.” - Lao Tzu
Read Fund Manger Gerrit Smit’s latest Global Equity Perspectives
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9 December 2019
“To attain knowledge, add things every day. To attain wisdom, remove things every day.” - Laozi
Read Fund Manger Gerrit Smit’s latest Global Equity Perspectives
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23 SEPTEMBER 2019
“Integrity is the essence of everything successful.” - R Buckminster Fuller
The Institute of Supply Management PMI Indices provide valuable information on US economic activity. Read More.
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2 September 2019
“Do the difficult things while they are easy and do the great things while they are small.” Laozi
The most important strategic issue for world capital markets remains the strength of the US economy. The following information can shed some light on this subject.
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18 August 2019
“The noblest pleasure is the joy of understanding.” Leonardo da Vinci
The US yield curve has made it to our front-page for the first time. Angst around trade tariffs and negative news on the German economy triggered the first inversion of the 2Y/10Y curve in the current economic cycle for a few short moments last Wednesday but featured in many headlines.
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29 July 2019
“The truth is more important than the facts.” Frank Lloyd Wright
Rolling annual GDP growth remains at the long-term average despite the second quarter moderation. Contrary to the run-up to previous recessions, the quarterly growth numbers are currently less volatile. This is rather constructive towards capital market stability.
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29 APRIL 2019
“Things are never clear until it’s too late.” Peter Lynch
Average consensus expectations of +2.1% GDP growth were handsomely exceeded at +3.2%. This brought the annual growth to +3.2%, the highest level since 2015. Growth in international trade and building inventory accelerated, making up half of the overall growth. Consumption growth slowed to a still respectable +1.9%. Overall nominal GDP is now a fifth larger than its peak before the Great Recession (with compounded growth of +1.8% p.a.).
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1 July 219
“Too often we enjoy the comfort of opinion without the discomfort of thought.” John F. Kennedy
The leading index’s growth continues at the previous month’s constructive level of +2.5% (on its long-term average). Against this, the growth in the current activity index in the chart continues its moderating trend. Importantly, the spread between the two series (the bottom section in the above chart) continues in positive territory. This spread has historically provided a very early warning against recession risks, but currently seems far from doing so. US – Spread Between Nominal GDP and Treasury Yield
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17 June 2019
“You will be much more in control, if you realise how much you are not in control.” Benjamin Graham
The Activity Index is still growing at a healthy +1.7%, but we can clearly expect GDP growth to moderate going forward. The major question is obviously how vulnerable the economy may be. On this note, the main US leading economic indicators continue to moderate but remain constructive.
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27 MAY 2019
“Life can only be understood backwards; but it must be lived forwards.” Søren Kierkegaard
We follow various US sentiment indices to better understand the outlook for economic activity. These indices do not reflect real economic data, but are useful to consider ‘the economic mood of the nation’.
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13 MAY 2019
“Whether you think you can, or you think you can’t, you are right.” Henry Ford
With the strong US economy consumption still makes up 69.4% of their GDP. Along with the comfort of continuing relatively constructive leading economic indicators, we also focus on the stability of consumer confidence.
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15 APRIL 2019
“The essence of portfolio management is the management of risks, not the management of returns.” Benjamin Graham
Whilst the growth in the leading economic index has moderated to +3.0%, it is still indicating a constructive environment. Along with this, the current economic activity index’s most recent reading picked up to +2.4%. Further, the spread between the two series (the bottom section in the chart) remains in positive territory and therefore provides comfort to equity investors.
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1 APRIL 2019
“Only the mediocre are always at their best” Jean Giraudoux
Equity markets have been spooked a few times in the recent past by fears for potentially sharper rising inflation levels in the US. These fears are mainly based on high employment and rising wages.
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18 MARCH 2019
“The stock market is designed to transfer money from the active to the patient” Warren Buffett
The combination of the Conference Board’s index of ten leading economic indicators and industrial production serve as a solid barometer of the health of the US economy.
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4 MARCH 2019
“It’s not the mountain that we conquer but ourselves” Sir Edmund Percival Hillary
We often start our note with a chart of a leading economic indicator to understand the risk of an imminent recession in the US.
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