Spy seems to get more press releases than Vietnam has motorbikes; most of these involve some AI angle these days. Many opine an AI-revolution and predict an impending jobs bloodbath. Over two very enjoyable bottles of South African Meerlust red this week, Spy debated AI’s real-world impact with a portfolio manager who has definitely drunk of the AI ambrosia. “You can expect thousands, no, millions of jobs to be eaten by AI,” he confidently told Spy. “Even my job is at risk.” Spy, always on the side of humans, asked his lively, but pessimistic companion: “Why, if this is so likely to happen, do we continue to see headlines such as these from the financial press?’ — “US law firms offer staff $50,000 for referrals as talent wars rage”. Surely there would be a surplus of lawyers (and accountants, economists, portfolio managers, salespeople, etc) if AI was really such an employment killer? Don’t believe all the hype, reckons Spy.
Spy meet TSPY. A firm called TappAlpha has just taken the second-best ticker in the book, TSPY, for its S&P 500 Covered Call ETF, listed in New York. Rather predictably, the strategy is made to sound easy-breezy in their blurb. “TappAlpha unveils a fintech-powered ETF with a daily covered call strategy on the SPY, marking a new era in combining technology with investment strategy. Cloud-based automation, AI, and analysis make arduous strategy implementation painless, reliable, and easy to run. This innovative approach aims to unlock capital appreciation and income opportunities, leveraging the latest fintech advancements for your benefit.” With all those exciting and adrenaline-producing buzz words, Spy ponders the only question that really counts: Will it work? Spy has absolutely no idea, but history has seldom rewarded complex investments sold as simplicity itself.
Do you remember Dr Doom? Nouriel Roubini made a name for himself by being on the right side of gloomy calls during the Great Financial Crisis in 2008. Sixteen years later, after numerous doom-laden calls, (many of which did not actually come to pass), the fêted economist is putting his money where his mouth is and bringing his own ETF to market. In the autumn, under the Atlas America brand, a fund that promises to have lower volatility than equities and better returns than bonds, is set to debut. Roubini, of course, lists numerous threats to the world economy and hopes, despite all these, to perform well in all conditions. In Spy’s experience, perma-bears and worriers tend to be outperformed by the optimists, in the long run.
Talking of ETFs, Spy wonders if the field could get any more crowded? In the first seven months of the year, 1,000 new funds were launched, which is a record, according to VettaFI. Asset managers have been dreaming up ever more creative ways to slice and dice and segment the investment world. With the relatively low cost of launching an ETF, it is no surprise that so many have been made available. Just because a fund is relatively cheap to launch, does not mean it is cheap to maintain, though. Spy fully expects at least 500 of those not to see the three-year mark.
Spy came across a stat that rather took his breath away. Vanguard has managed to pull in net new money of about $1bn per day for the last decade. Vanguard has shunned paying introducer or intermediary fees, meaning its marketing and messaging alone have driven the machine. Vanguard has not had a single year of net negative outflows for 25 years. Spy tips his hat to the boys and girls of Malvern, Pennsylvania; that is one cracking achievement.
It is the end of August. Real news, beyond tragic boating accidents involving billionaires and politicians waffling interminably, is rather thin on the ground. Market commentators are getting terribly excited about Fed Chairman, Jerome Powell, speaking at Jackson Hole today. Spy came across this little picture that sums up Powell’s speech in advance. It is, after all, an election year and the chairman would probably like to keep his job. We can all expect the punch bowl to be refilled. Chuck Prince, former CEO of Citibank said, “When the music stops, in terms of liquidity, things will be complicated, but as long as the music is playing, you’ve got to get up and dance.” Spy is pretty sure Powell wants everyone to keep dancing.
Funds in Singapore had a good Q2 according to Morningstar. Net inflows were S$1.8bn ($1.38bn) which was nearly 90% up from the previous quarter’s S$975.3m. Unsurprisingly, it was fixed income funds that attracted the lion’s share of flows with just over S$900m worth. Money market funds also had a good quarter attracting S$622m. The rest was equities and other assorted assets such as commodities.
In 1999 Britain’s former Chancellor of the Exchequer and socialist Prime Minister, Gordon Brown, foolishly sold half of Britain’s gold reserves at $252 per ounce, cheered on by the Financial Times. It proved to be one of the most disastrous trades of all time. Has Germany just made the modern equivalent? Germany has just sold ALL of its bitcoin. For bitcoin believers, it is the new gold and, unlike gold, it is finite. Bookmarked for future reference.
Which commodities have performed the best in the last 12 months? Zinc is up 23%, silver up 26%, gold up 33% and coffee beans are up 65%. Those are all put in the shade by cocoa which is up a whopping 122%. It is enough to make Spy choke on his beloved Lindt balls (red packaging).
Neuberger Berman is getting in on the MRT advertising act. At Raffles MRT in Singapore, the American asset manager is promoting its Strategic Income fund.
Until next week…
