Report
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Don't Throw Out the Baby With the Bathwater
- Rotate out of the US equities into Japan or even Europe. The US growth-style-driven rally is mature, the market is expensive and the Fed is continuing to raise rates, but these aren’t triggers to dump equities in the other two major markets as well.
- Despite these headwinds, the US economy seems absent of large macro imbalances that have typically led to bear markets. This allows the Fed to continue withdrawing stimulus, without crunching growth. Nonetheless, prospects for above par returns in US equities seem limited.
- On the other hand, Japanese and European equity markets are still early-cycle. These markets are cheap, earnings are being upgraded and their central banks have well-anchored and easy policy, which leaves room for further yield curve steepening. Both of these markets also benefit from any further stronger dollar-strength.
- In Japan, most sectors have cheap earnings and free cashflow with strong balance sheets, while in Europe value is more narrowly based and confined to Autos, Telco’s and Insurance. However, Banks in Europe offer cheap free cashflow relative to the other markets and they will benefit from a steeper yield curve and stronger economy.
Provider
Macro Strategy Advisors Pty Ltd
About us:
- The business is a Proprietary Limited Australian company that is owned and fully operated by Shane Lee from a small office in Sydney’s CBD.
- Shane worked for 17 years in Sydney-based senior research roles (economist, equity strategist and bond strategist) in global and regional investment banks and a domestic commercial bank prior to starting Macro Strategy Advisors. These roles straddled the asset classes making him uniquely positioned to advise multi-asset investors. He worked for the Reserve Bank of Australia (RBA) for 3 years as a housing, commercial property and equity market analyst and a liquidity forecasting specialist. He worked as a structural engineer in Queensland for 10 years prior to his career at the RBA.
Aim of our business:
- To partner with our clients in their aim to maximise returns. We provide timely, independent and thought-provoking research on thematic macro issues that are impacting or could impact financial markets. We aim to produce research that prompts our clients to question their assumptions.
Services:
- A fortnightly research note.
- Regular presentations and data support delivered by understanding our clients interests and investment process.
- We also in work in confidence to investigate, analyse and report on issues at our clients direction. This work is done on a project-by-project basis.
- As an Australian based business, the main focus is analysing how domestic and global issues impact Australian investors. However, our global and domestic insights are also valued by our offshore clients.
Our Edge:
- Our low cost base relative to our competitors allows us to provide a quality product at a reasonable cost.
- We are fully independent and don’t support a banking function or any third party. We have no interests other than providing our clients with the best possible research.
- Our focus is not point forecasting, but providing rigorous analysis and insight. We don’t routinely focus on the top or bottom 10% of likely outcomes to create a headline.
- Shane’s background in engineering has provided clients with unique insights into global infrastructure and domestic housing issues.
Shane Lee
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