Even a stopped clock is right twice a day. Cliché for sure, but a grain of truth nonetheless. Spy would imagine there will be wry smiles today in some high places. The European Securities and Markets Authority, this week warned of a “prolonged period of risk” to both institutional and retail investors, including “possibly significant” market corrections in the months to come. Meanwhile, Charles Evans, a Fed board member, said yesterday morning, “I marvel at the stock market’s rise despite the uncertainty.” About as strong a warning as you will ever get from the C-suite of the market cheerleader-in-chief. Will we hear anything from these regulatory gods about central banks being partly to blame? Spy won’t bet his chilled bottle of Côte de Léchet Chablis on it.
Spy has learned that Pinebridge is adding to its marketing team in Hong Kong. Richard Li’s asset manager has hired Leonie Wong, who was vice president, marketing, Asia ex-Japan at State Street Global Advisors, is joining the firm at the end of September. Spy has no news on who is replacing Leonie at SSGA where Ellen Tsang remains head of marketing in Asia. Pinebridge had had success in the last 12 months with its Asia ex Japan strategy up a healthy 41%.
Yesterday’s exciting bout of volatility will have comforted bears and had them rubbing their hands with glee. Those managers who have not believed in the rally, and almost certainly missed it, must feel a touch of ‘schadenfreude’. With the Nasdaq 100 falling 5% the numbers get rather lively. Here are some fun ones:
Yesterday alone, the market cap of #FANGMAN stocks dropped $400bn – equal to the GDP of Norway (for those who care about such arbitrary comparisons).
Apple traded back down to a $2trn market cap – poor darling.
The $300bn decline in Apple’s market cap over the last two days is greater than the market cap of 485 companies in the S&P 500. And Apple is now worth less than the combined value of the Russell 2000 or FTSE 100 constituents, having been worth more earlier this week.
Tech moguls lost $44bn yesterday. Jeff Bezos of Amazon led the way with $9bn evaporating. Where will they find a dollar for their next whisky?!
After such a monster rally, does it all matter one tiny iota? For some paranoid investors, the parallels with 1929 are a tad striking. According to Sven Henrich, “September 3rd marked the top in 1929 following a furious rally fuelled by wild optimism, excessive retail speculative behaviour and markets disconnecting far above the fundamentals of the economy.” That does sound rather familiar, to be fair.
Spy loves experienced active portfolio managers, especially in times of volatility. For a great interview with a remarkable woman, you should do yourself a favour and read this interview with Claudia Huntington, an equity PM with Capital Group, who has had five decades of investing. Spy loved this quote, among many other gems in the interview: “I’ve learned that this business is more art than science. Early in my career, I thought it was primarily about math and perfecting my model. Sure, you need math, but the more you invest, the more you realize it’s about making judgments — about people and about the future. There are no facts about the future, so you have to try to look around corners.” Spy could not agree more.
Spy has a weak spot for a beautiful, boutique hotel, especially one which discourages children. That is rather bad news if Aberdeen Standard is right. It is predicting that we are going to see a flourishing of “apartment hotels”. According to their latest Thinking Aloud blog: “The effects of Covid-19 could accelerate the demand for apartment hotels, particularly for longer stays. Not only do they appear to be a cheaper option, but consumers are likely to have greater confidence in these facilities as all the necessities are in the apartment (for example, kitchen, bathroom, bedrooms) with little or no communal space. Furthermore, we expect that the corporate market will take a larger share, such as block rentals, to serve travelling staff.” It sounds horrible and thoroughly depressing if accurate…
Allianz Global Investors didn’t pull its punches this week. Dr. Hans-Jörg Naumer, director, global capital markets and thematic research, states rather bluntly in an insight note that “the next round of financial repression is on its way”. He is of course referring to ultra-low rates everywhere. “More than 70% of the global government bond market has a return of one percent or less, with almost 30% showing a negative return.” That hunt for yield just goes on and on and on…
Last week Spy mentioned changes at BNP Paribas AM. As part of those changes, industry veteran Guillaume Wehry has taken full responsibility for all regional marketing activities and has been appointed as head of marketing and communications for Asia-Pacific.
Hardly a day goes by when new expansion into China is announced by an asset manager or a bank. This week it is Singaporean banking giant DBS. The firm has won regulatory approval, according to Caixin, to set up a majority-owned securities joint-venture on the Chinese mainland, one of the latest foreign companies to benefit from China’s financial opening-up. The bank will own 51% of the new venture, with the remaining stakes controlled by four Shanghai companies.
Sometimes a picture is worth a thousand words. This cartoon was doing the rounds this week. Spy suspects a few mom and pop, newbie, Robinhood day traders who think they understand options trading after five minutes, are feeling like this today:
Until next week…
