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Protein Capital Lands in the U.S., Opening Its First Office in Miami

miami-beach-gf590f45d4_1920 — Pixabay CC0 Public Domain. Protein Capital desembarca en Estados Unidos y abre su primera oficina en Miami

Protein Capital will establish its first office in the United States. As announced a month ago, this opening responds to the company’s expansion plans through which it expects to reach its target of 30 million euros (33.75 million dollars) by 2021.

The company has revealed in a press release that its interest in entering the North American country lies in the fact that it is the main market for this type of funds. Of the 397 in the world, 66.44% are in the United States, where Miami is becoming the most important crypto hub worldwide. In addition, Protein Capital believes the city is an ideal focus for “attracting talent and creating a high-level professional team”.

Due to the new opening, Alberto Gordo, CEO, traveled to the country to meet with the team of the new office and participate in the presentation event of Protein Capital Fund.

Protein Capital is the first hedge fund with 100% Spanish capital dedicated to digital assets. Founded in February 2021, it currently manages a €15 million fund through its offices in Madrid, Luxembourg and Miami.

Pictet Asset Management: The Skies Darken

| For Cecilia Prieto | 0 Comentarios

Photo courtesyLuca Paolini, chief strategist at Pictet Asset Management

Prospects are darkening for the world economy. As central banks raise interest rates to combat inflation, GDP growth will slow further, raising the probability of a worldwide recession.

With global liquidity conditions continuing to worsen at the same time, we retain our underweight on equities, whose valuations are even more difficult to justify after the recent market rally. We hold our overweight on bonds; US Treasuries in particular are trading at levels that offer inexpensive protection from ongoing weakness in the economy.

To turn more positive on stocks, we would need to see corporate earnings forecasts stabilise, a steeper yield curve and better relative valuations for cyclical equity sectors.

Our business cycle indicators show that momentum in the US is negative and deteriorating, as reflected in analyst forecasts (see Fig. 2). There is increasing evidence of weakness in the housing market, construction activity has collapsed and domestic demand has stalled.

Looking ahead, we expect US GDP growth to slow to well below trend for the next three quarters (at an annualised 0.4 per cent quarter-on-quarter) before a tepid recovery emerges in the second half of next year. Even if price expectations appear stable – a silver lining of sorts – there is still a risk of persistently sticky inflation. This, in turn, would trigger additional monetary tightening and tip the US economy into recession.

For the euro zone, a recession looks even more likely and, indeed, is our base case scenario. One positive is the improvement in energy security dynamics thanks to increased gas storage levels (with a number of countries at full capacity) and a corresponding fall in gas prices. Nevertheless energy rationing beyond the winter months is still a possibility, which poses a risk for industrial production.

Elsewhere, in the wake of President Xi Jinping’s consolidation of power in China, we are reassessing both the near- and medium-term prospects for the Chinese economy. The annual Central Economic Work Conference due to take place in December should offer further clarity on the direction of economic policy.

Our liquidity indicators show that excess money – which we measure as broad money minus domestic industrial production growth – is shrinking rapidly. Some USD8 trillion of post-pandemic monetary stimulus has been withdrawn by central banks since March. At the current pace, it would take another five months to reclaim pre-pandemic trends and fully purge monetary inflation. The effects of quantitative tightening – the selling of bonds held by the US central bank – have been amplified by the actions of both commercial banks and central banks in the emerging world, which have also been shedding holdings of US bonds.

We expect that liquidity conditions will remain negative for riskier asset classes heading into the start of the new year, and quite possibly longer, which would normally put pressure on stocks’ earnings multiples.

The main change in our valuation models is that fixed income offers increasingly good value, with global bond yields now at their highest levels since mid-2011. Notably, 10-year US Treasury yields have surged to 4.3 per cent, far exceeding our fair value estimate of 3.5 per cent.

Although stocks have suffered a sharp sell-off – the MSCI World index is down 22 per cent year-to-date – they are not yet cheap enough to account for possible further deterioration in economic growth and corporate earnings prospects. We see global earnings per share staying flat over the coming 12 months, well below the analyst consensus of 6 per cent growth. Even our forecast could prove optimistic.

Technical indicators support our underweight stance on equities. Trend signals remain weak across regions. Investor positioning in riskier assets is relatively cautious, especially among institutional investors. Net long positions on S&P 500 futures are at a record low, pricing in a significant deceleration in growth momentum, which could be consistent with the US ISM index falling to 45 (compared to September’s level of 50.9).

Opinion written by Luca Paolini, Pictet Asset Management’s Chief Strategist

Discover Pictet Asset Management’s macro and asset allocation views.

Globally 90% of Companies either Raised Their Dividends or Held Them Steady Year-on-Year

| For Beatriz Zúñiga | 0 Comentarios

Pixabay CC0 Public Domain. El 90% de las compañías a nivel mundial han aumentado o mantenido sus dividendos en los últimos 12 meses

Global dividends are rapidly recovering from the pandemic, according to the latest Janus Henderson Global Dividend Index. Thanks to rising profits and strong balance sheets, in the third quarter of 2021 payouts rose at a record pace of 22% year-on-year on an underlying basis to deliver an all-time high for the quarter of 403.5 billion dollars. The total was up 19.5% on a headline basis.

Janus Henderson revealed that its index of dividends is now just 2% below its pre-pandemic peak in the first quarter of 2020. Globally, 90% of companies either raised their dividends or held them steady, which, in the firm’s view, is one of the strongest readings since the Index began and reflects “the rapid normalisation of dividend patterns as the global recovery continues”.

The exceptional strength of Q3 payout figures, along with improved prospects for Q4, have led the asset manager to upgrade its forecast for the full year. It now expects growth of 15.6% on a headline basis, taking 2021 payouts to a new record of 1.46 trillion dollars. Janus Henderson anticipates that global dividends will have recovered in just nine months from their mid-pandemic low point in the year to the end of March 2021. Underlying growth is expected to be 13.6% for 2021.

The most relevant sectors and markets

The analysis shows that soaring commodity prices resulted in record profits for many mining companies; more than two thirds of the year-on-year growth in global payouts in Q3 came from this sector. Three quarters of mining companies in Janus Henderson’s index at least doubled their dividends compared to Q3 2020. “The sector delivered an extraordinary 54.1 billion dollars of dividends in Q3, more in a single quarter than the previous full-year record set in 2019. BHP will be the world’s biggest dividend payer in 2021″, said the firm.

The banking sector also made a significant contribution, mainly because many regulators have lifted restrictions on payouts and because loan impairments have been lower than expected.

The index also highlights that geographies that had seen the steepest cuts in 2020 and those most exposed to the mining boom or to the restoration of banking dividends saw a rapid recovery. Australia and the UK were the biggest beneficiaries of both of these trends. Europe, parts of Asia and emerging markets also saw large increases on an underlying basis.

Those parts of the world, like Japan and the US, where companies did not cut much in 2020 naturally showed less growth than the global average. Nevertheless, US company dividends rose by a tenth to a new Q3 record. A strong Q3 means Chinese companies are also on track to deliver record payouts in 2021.

“Three important things changed during the third quarter. First and most importantly, mining companies all around the world have benefited from sky-high commodity prices. Many of them delivered record results and dividends followed suit. Secondly, banks took quick advantage of the relaxation of limits on dividends and restored payouts to a higher level than seemed possible even a few months ago. And finally, the first few companies in the US to start the annual dividend reset showed that businesses there are keen to return cash to shareholders”, commented Jane Shoemake, Client Portfolio Manager on the Global Equity Income Team.

In her view, a big driver for 2022 will be the ongoing restoration of banking dividends, but it seems unlikely that mining companies can sustain this level of payouts given their reliance on volatile underlying commodity prices: some of these have already fallen. “Miners are therefore likely to provide a headwind for global dividend growth next year”, she added.

Implications for portfolio allocations

Ben Lofthouse, Head of Global Equity Income at Janus Henderson, pointed out that dividends are recovering more quickly than expected, driven by improving corporate balance sheets, and increased optimism about the future. “Two of the most impacted sectors last year were the commodity and financial sectors, and the report highlights that these sectors have been the most significant driver of dividend growth during the period covered. We have added to these sectors over the last year, and it is great to see shareholders being rewarded by increased distributions”, he said.

CAIA to Launch its Latin American Chapter

| For Gabriela Huerta | 0 Comentarios

Screenshot 2021-11-16 085040 — Pixabay CC0 Public Domain. foto

Composed of representatives from Brazil, Mexico, Chile, Colombia and Peru, the CAIA Association prepares the launch of its 32nd Global Chapter: CAIA LatAm, which will work to provide opportunities for local CAIA members to network, share knowledge and create a environment that encourages the growth of the local alternative investment industry.

The chapter will also host educational events with opinion leaders, who will discuss a variety of trends and alternative investment strategies.

As Daniel Mueller, CAIA, director of the LatAm Chapter, commented to the Funds Society, “we decided to launch this chapter because of the great interest of CAIA Latin American Charterholders in having a local community that serves the needs of the local industry and allows continuous growth. The needs are multiple; to improve the education of alternative assets, to bring the best global practices to the local Latin American industry, and to have a community that encourages networking and career development.”

The official launch will take place on November 30, 2021 with a hybrid event via zoom, from Santiago de Chile.

Join CAIA Association Executive Director Bill Kelly, CAIA Executive Vice President John Bowman, and the LatAm Chapter Committee for this special launch event as they outline their mission and plans for 2022!

Kandor Global Expands its International Infrastructure with Four New Team Additions

| For Magdalena Martínez | 0 Comentarios

Captura de Pantalla 2021-11-15 a la(s) 10 — Foto cedida. ,,

Kandor Global, the Miami based RIA serving ultra-high-net-worth clients worldwide, has announced the addition of four new recruits that will strengthen the Investments and Reporting teams to enhance services to international clients. In a press release, the firm has also revealed that it has amassed 500 million dollars in assets under management after just a year of its launch.

One of the new recruits is Santiago Torres, who joins as an Associate in the Private Investments division. He previously accumulated 5 years of experience with Global Seguros de Vida, one of the largest institutional investors in the private markets sector of Colombia. “Kandor Global is confident that his experience will ensure best practices, spanning from due diligence to implementation, from an institutional perspective”, said the company. To support him in this mission joins Santiago López Zapata, who previously worked at Banco de Bogotá.

“Currently, the team has managed investments in 80 funds and we expect this number to increase as our clients have shown a strong interest in private investments due to performance and ability of a true long term investment. Our sharp and experienced team can effectively offer our clients a broad portfolio of managers while managing the processes efficiently for all parties involved”, stated Guillermo Vernet, Founder & CEO of Kandor Global.

Two additional members now reinforce the reporting team that manages a holistic view of the clients’ investments by using Addepar: Santiago López Cardona and Gabriela Díaz. According to the firm, their technological savviness will contribute to maximizing the use of Kandor Global’s current tools and incorporating others necessary in providing custom reports to clients.

“Since our launch, our focus has been in creating a strong, agile and enthusiastic team. We’re an effective team of 15 members spanning different locations in the U.S., Colombia, and Spain. In the next steps of expanding the business, we are avidly recruiting new advisors and focusing on intensive due diligence for domestic and international acquisitions,” added Vernet.

Kandor Global serves ultra-high-net-worth clients worldwide through a wide array of services: multi-family office, wealth management and private markets consulting. The firm is headquartered in Miami with an extended reach across Latin America and Europe. It is supported by Summit Growth Partners, LLC (“SGP), a partnership between Summit Financial Holdings and Merchant Investment Management.

Pictet Asset Management: Inflation Presents Greater Risk to Bonds than Stocks

| For Meritxell Sedo | 0 Comentarios

Times are tough for global financial markets. Monetary conditions are tightening while supply chain bottlenecks are starting to take their toll on the global economy. At the same time, inflationary pressures are proving more persistent than previously expected.

We believe fixed income markets will be particularly hard hit, as yields adjust to higher inflation and the prospect of tighter monetary policy. High yield bonds appear especially vulnerable. Equities won’t be immune to market jitters either. But, on balance, we believe they should hold up better than bonds because economic growth is still strong enough to allow for positive surprises in corporate earnings.

Our business cycle indicators for the world have turned neutral after a year in positive territory. However, they still suggest that economic growth will remain comfortably above the long-term trend, at 5.9 per cent this year and 4.8 per cent in 2022.

That is consistent with corporate earnings growth of around 15 per cent next year – double the pace of the consensus forecast. Upside surprises in profits are more likely in Europe and Japan, where the economic recovery has further to run.

Although growth momentum in the euro zone appears to be stalling, with industrial production weighed down by supply frictions, government and central bank policies remains supportive. The risk of monetary and fiscal tightening here is lower than in other developed markets.

In Japan, meanwhile, confidence is recovering from historically depressed levels and business activity surveys are improving.

The situation is more negative in China, however, where activity continues to slow, whether that’s in terms of industrial production, construction and fixed asset investment. However, sentiment surrounding the vital property sector (which account for around 25 per cent of the country’s GDP) appears to be stabilising. That is in part due to debt-laden property developer Evergrande coming good on coupon payments, averting a default at the last minute. Authorities in Beijing, meanwhile, have encouraged banks to lend to the property sector.

While we still expect more stimulus from China, it has been less forthcoming than we originally expected, with policymakers prioritising deleveraging over short-term growth. Elsewhere central banks are starting to drain liquidity, particularly the US Federal Reserve and the Bank of Japan. Private credit creation, meanwhile, remains dormant and is not expected to recover until next year. As a result, the total liquidity provision among the world’s five biggest economies has now dropped to the equivalent of 11.9 per cent of GDP, down sharply from last year’s peak of 28.7 per cent. This prompts us to downgrade our global liquidity score to neutral (1).

However this decline should be gradual in order to ensure the recovery remains on track. Indeed, central banks are likely to show higher tolerance for inflation, not least because their policy moves cannot address the most immediate cause of price increases – supply bottlenecks.

Nevertheless, tighter liquidity is sure to have a negative impact on valuations – both for equities and bonds. Our models suggest that a 100 basis points rise in real yields translates into a 20 per cent drop in stocks’ price-earnings ratios. However, we believe we have already seen most of that move.

Although equities look expensive relative to bonds, our estimate of the equity risk premium still points to relative upside for stocks in most regions. Companies’ sales figures are beating forecasts by less than the previous quarter, but corporate earnings surprises are still high, which points to healthy operating leverage (see Fig. 2). In the short-term, at least, we believe profit margins will be resilient to rising input cost pressures.

Valuations support our preference for defensive healthcare stocks (among the cheapest sectors in our model, in relative terms) and caution on expensive US high yield bonds.

Technical charts show positive seasonality for equities, as well as supportive medium-term trends. Some investor surveys, including the American Association of Individual Investors (AAII), indicate bullish sentiment.

In contrast, short-term momentum for bonds has deteriorated across the board. The Bank of America fund manager survey shows investors allocation to bonds sits at all-time lows. At the same, net short positioning for US Treasuries, especially in the 2- and 5-year maturities, has increased significantly.

Opinion written by Luca Paolini, Pictet Asset Management’s Chief Strategist.

Discover Pictet Asset Management’s macro and asset allocation views.

Notes:

(1) Measured as policy plus private liquidity flows, as % of nominal GDP, using current-USD GDP weights for US, China, euro zone, Japan and UK.

Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to risks and uncertainties that could cause actual results to differ materially from those presented herein.

Important notes

This material is for distribution to professional investors only. However it is not intended for distribution to any person or entity who is a citizen or resident of any locality, state, country or other jurisdiction where such distribution, publication, or use would be contrary to law or regulation.

The information and data presented in this document are not to be considered as an offer or sollicitation to buy, sell or subscribe to any securities or financial instruments or services.

Information used in the preparation of this document is based upon sources believed to be reliable, but no representation or warranty is given as to the accuracy or completeness of those sources. Any opinion, estimate or forecast may be changed at any time without prior warning. Investors should read the prospectus or offering memorandum before investing in any Pictet managed funds. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Past performance is not a guide to future performance. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.

This document has been issued in Switzerland by Pictet Asset Management SA and in the rest of the world by Pictet Asset Management (Europe) SA, and may not be reproduced or distributed, either in part or in full, without their prior authorisation.

For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.

Pictet Asset Management (USA) Corp (“Pictet AM USA Corp”) is responsible for effecting solicitation in the United States to promote the portfolio management services of Pictet Asset Management Limited (“Pictet AM Ltd”), Pictet Asset Management (Singapore) Pte Ltd (“PAM S”) and Pictet Asset Management SA (“Pictet AM SA”). Pictet AM (USA) Corp is registered as an SEC Investment Adviser and its activities are conducted in full compliance with SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref.17CFR275.206(4)-3.

Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in Canada to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).

In Canada Pictet AM Inc is registered as Portfolio Manager authorized to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA.

Jupiter AM Names Matthew Beesley as New CIO

| For Beatriz Zúñiga | 0 Comentarios

Jupiter AM nuevo CIO — Foto cedidaMatthew Beesley, nuevo CIO de Jupiter AM. . Jupiter AM incorpora a Matthew Beesley como nuevo CIO

Jupiter AM has announced the appointment of Matthew Beesley as Chief Investment Officer (CIO), succeeding Stephen Pearson who is retiring following a 35-year career in the industry including nearly two decades at Jupiter. He will join the company in January 2022.

The asset manager has revealed in a press release that Beesley will initially work closely with Pearson to ensure a seamless handover. Besides, he will report to CEO Andrew Formica and join the Executive Committee. In his new role, he will have overall responsibility for the management of all of Jupiter’s investment professionals and strategies across equities, fixed income and multi-asset.

Supported by Jupiter’s eight-strong CIO office, “he will also have oversight of the associated functions that form the backbone of the company’s investment process”, including its dedicated stewardship, data science, dealing and performance analysis teams.

“The role of CIO is crucially important to the delivery of our strategic objectives through the guardianship of our dynamic, actively-driven investment culture at Jupiter. The fact that we have attracted a high calibre individual such as Matt is a testament to our talented fund management team and the enduring appeal of the Jupiter brand to an increasingly diverse global client base”, commented Formica.

In his view, Beesley shares their commitment to actively-driven returns and has “a well-deserved reputation” for being an “effective and inspiring” leader: “We are confident that, under Matt’s leadership, we will continue to deliver the strong investment results for our clients that is a hallmark of Jupiter”.

With nearly 25 years of experience in the investment industry, Beesley joins Jupiter from Artemis, where he has been CIO since April 2020. Prior to this, he was Head of Investments at GAM Investments from 2017 to 2020, where he was responsible for the management and oversight of its investment strategies managed by teams based in Europe, Asia and the US. Beesley has also been Head of Global Equities at Henderson, responsible for a team managing significant assets in global, international (World ex US) and Global Socially Responsible investment strategies.

Beesley claimed to be “excited” to take up the mantle from Pearson as the business develops, grows and adapts, to ensure they continue to meet clients’ needs “and deliver the superior investment performance that Jupiter is known for.”

Stagflation?

| For Alba Menéndez | 0 Comentarios

autumn-gaaa5939b6_1920 — Pixabay CC0 Public Domain. mundo

Production losses and rising commodity, energy and logistics costs are dampening economic growth and could lead to increased bankruptcies among companies with low earnings. Emerging markets such as India and Cambodia are also increasingly suffering from energy shortages and dramatic price increases. More than 50 per cent of energy production is based on coal, whose price has skyrocketed. Developing new deposits takes a long time and is politically undesirable. Inventories are empty and in addition to hitting the economy of the region, the power shortages that are expected would also worsen global supply-chain problems.

To what extent these losses can be compensated by higher prices depends on the structure of the economy. Net exporters of energy and commodities (e.g. Russia) currently have the advantage over net importers (e.g. Germany). Energy- and commodityhungry China will also likely see a decline in growth. September saw the first decrease in manufacturing activity since the beginning of the pandemic, due to production losses caused by the shortage of electricity in many parts of the country.

There are also signs of a crisis in the Chinese real estate market, where the difficulties of China’s largest real-estate developer Evergrande are causing unrest. The company has more than EUR 250 billion in liabilities, with bonds and bank loans accounting for around 30 per cent of this amount. The largest share is for liabilities to customers and suppliers, i.e. construction companies. It is common practice for property buyers to make advance payments for properties that are still under construction. A collapse of the company would therefore not only affect shareholders, bondholders and lending banks, but also property buyers and suppliers. The situation could become especially precarious if real-estate prices were to fall across a broad front, thereby causing difficulties for other real-estate companies. Given the great importance of the real-estate sector, which economists Kenneth Rogoff and Yuanchen Yang calculate contributes 29 per cent of China’s economic output, and real-estate assets that represent around two thirds of the total assets of Chinese households, a collapse in prices would have serious consequences for the Chinese economy.

The crisis, however, also reveals the structural weakness of the Chinese economy. Credit-financed investments in unproductive residential towers caused private household debt to grow strongly and inflated bank balance sheets. Since the financial crisis in 2008, total debt (private households, companies, government) has grown significantly faster than the growth rate of the economy (see Figure 1).

More and more yuan of additional debt must be incurred for each yuan of additional growth. This model has now reached its limits. The Chinese government is aware of this and Xi Jinping’s call to “strive for real and not excessive growth” may be taken as an indication that other areas of the economy, such as consumption and technology investment, will take priority in the future.

The Evergrande case will likely also make an example of the widespread problem of moral hazard, since a rescue of all interest groups is not expected. Ultimately, the Chinese state banks will work with the central bank and government to manage the crisis in a way that avoids social unrest in order to maintain the legitimacy of the leadership. Shareholders and bondholders will probably go away emptyhanded. It is exaggerated, however, to compare this to the Lehman Brothers bankruptcy and subsequent financial crisis, since there are practically no loans with parties abroad. The expected slowdown in the Chinese real-estate market will nevertheless also have a negative effect on global economic growth.

Given the strong growth in the USA, however, it would be premature to talk of global “stagflation”. This term, which was coined in the seventies, describes the simultaneous combination of falling or stagnant economic output and rising prices. At that time, an oil embargo by Arab exporters caused the price of oil to increase from three to 12 dollars within a year. Inflation rose to 12 per cent in the USA in 1974, while real growth was minus 0.5 per cent and remained below zero in 1975 (see Figure 2).

Although the current situation is not comparable to the seventies, a new inflation regime could become established if the inflation bump continues longer and leads to higher inflation expectations.

So-called second-round effects, in particular higher wage demands in future collective bargaining, will play a role in this. Even if the inflation bump has already receded again by then, the unions will not simply forget the increase in inflation this year but will instead demand extra compensation. This would increase the inflation base.

There are also structural factors that are likely to lead to a higher level of inflation in the long term: deglobalisation, decarbonisation and demographics.

• Deglobalisation: Supply-chain problems are causing companies to distribute their production facilities more broadly and, in some cases, renationalise them. However, choosing resilience instead of efficiency also increases costs.

• Decarbonisation: Climate protection is not without cost. This is politically intended. In addition to significantly increasing CO2 prices, which will have a direct effect on consumer wallets (electricity, petrol, natural gas), the energy transition will also increase production costs, which will indirectly lead to higher consumer prices.

• Demographics: The Baby Boomers will retire in coming years, thereby further worsening the already noticeable shortage of skilled workers. This will drive up labour costs. A growing number of older people who are no longer working will increase the costs of health and pension insurance, therefore also increasing labour costs.

A column by Bert Flossbach, cofounder at Flossbach von Storch

Rigid Prices in the United States?: Comments on October Inflation Data, a 30 Year Record

| For Magdalena Martínez | 0 Comentarios

Captura de Pantalla 2021-11-10 a la(s) 13 — Piqsels. ,,

In October, inflation in the United States reached 6.2% year-on-year, a figure not seen in 30 years that coincides with supply problems, strong consumer demand and, consequently, an increase in prices. At this point, analysts move away from the transient/structural dichotomy and point to a scenario that will see rising and rigid prices appear in some sectors, while not in others.

The new data

Price growth was led by categories such as housing, used and new cars and, of course, energy, since these components have witnessed strong simultaneous restrictions on demand and supply in some areas. In a first analysis this Wednesday, BlackRock considers it likely that “inflation will remain on the high side for a while and the risks of rigid inflation persist.”

Thus, Rick Rieder, head of global fixed income investments at BlackRock, points out that “over time pandemic distortions and extreme base effects are likely to decrease, causing aggregate prices to recede towards a 2% growth rate and allowing quantities to continue expanding once supply pressures are eased, but this will not happen quickly. However, this is not a normal set of historical patterns that can be easily modeled; many inflation factors are likely to remain rigid for a while, even when the aggregate inflation metric of the PCE can normalize in the coming year.”

“It is fascinating to note that, while the supply chain interruptions we are experiencing are clearly a global phenomenon, the U.S. stands out for the dramatic way in which longer delivery times and higher prices are affecting the economy. This is likely to be due in part to the fact that the United States committed itself to an extraordinary stimulus during (and after) the acute phase of the crisis, which boosted savings, household wealth and, ultimately, an extraordinary demand for goods,” Rieder adds.

The manager considers that some cost pressures may begin to decrease in the first and second quarters of 2022. For example, the nature of the pandemic crisis, with initial blockades, social distancing and mobility restrictions, temporarily reversed a trend of more than seven decades towards greater participation of consumption in services, with a marked rebound in the share of goods in consumption.

The data does not justify a stagflation situation

“However, although many easy comparisons have been made with other historical periods of high inflation (such as the 1970s and early 1980s), and the term “stagflation” has spread quite lately, we do not believe that the data justify such concerns,” Rieder considers.

“To be more specific, in terms of rising energy costs, the lack of energy investment in recent years reflects overinvestment in the sector during the period 2012 to 2014. In fact, capital expenditure in the energy sector as part of the S&P 500 has decreased from a peak of more than 30% to recent lows of only 5%. As such, energy prices around current levels may persist or even worsen during a cold winter, but there is no structural shortage of oil, but what we are witnessing is a seasonal or perhaps cyclical phenomenon, “they add from the asset management firm.

Rieder believes that the risks derived from inflation have increasingly become a priority for Federal Reserve policymakers, since excessive accommodation for too long, or essentially making the economy warm up, could well have unintended consequences on the market that further erode confidence and eventually harm the recovery: “We were pleased to see the Fed’s recent decision to start reducing asset purchases, which will be an important evolution for policy, but our eyes (and those of those responsible of policy formulation) will focus on inflation data in the coming months.”

Julius Baer: there is no need to fear slower growth and high inflation

Shortly before the publication of October inflation data in the United States, Julius Baer analyzed the situation in two axes:

Economic growth is slowing down due to supply constraints, while demand remains solid.
Inflation remains largely transitory, since autonomous inflation dynamics are the exception, not the rule.

“The slowdown in economic growth that has fallen from the highest growth rates of all time in the first half of the year and, together with high inflation rates, gives the remarkable impression of stagflation. At the same time, demand remains robust, which contradicts concerns of stagnation. Strong demand in many areas and insufficient supply are in fact the main cause of high inflation. But the response on the supply side is increasingly visible,” they announced from the entity.

The U.S. labor market and inflation

The U.S. labor market added 531,000 new jobs in October and the September data were revised upwards to 312,000 new jobs. Unemployment fell and hourly pay continued to increase, although at a slower pace than in the previous month. As a result, the U.S. labor market remains quite tight, “which fuels fears that high inflation will not only be less transitory, but vicious circles between wages and prices are emerging,” Julius Baer points out.

“While a spiral of prices and wages is a clear possibility, it is unlikely to happen. Formal links in wage contracts between inflation and wage increases remain quite rare and current wage increases are, in most cases, in line with productivity growth, which reduces the pressure to increase prices due to higher wages. The risk of other types of vicious inflationary circles also remains remote, at least in the U.S. and the Eurozone,” explain the bank analysts.

“The depreciation of exchange rates due to high inflation, which leads to higher import prices, is not a problem. In addition, credit dynamics are quite mediocre, despite historically low interest rates and flexible credit conditions, which prevents high inflation from further boosting demand. Therefore, high inflation remains largely a transitory phenomenon, with some more permanent driving factors such as higher rental inflation in the future, while autonomous inflation dynamics are largely absent,” they conclude from Julius Baer.

Leste Group Plans to Reach 8 Billion Dollars in AUM by 2025

| For Gabriela Huerta | 0 Comentarios

Screenshot 2021-11-04 121806 — Stephan de Sabrit, foto cedida. , foto cedida

Since its creation in 2014, Brazilian-born firm, Leste Group, has been consolidating its presence in the alternative asset market, with offices in Miami, London, Sao Paulo and soon New York.

In an interview with Funds Society, Stephan de Sabrit, the firm’s managing partner and co-founder, shared that something that makes them special is their revolutionary partnership model, whereby Leste, as a holding company, partners with world-class investment managers, which are completely dedicated to their line of business.

Leste supports them with compliance issues, and all they need to launch their business, “leaving the front office to the partners, while Leste takes care of everything that goes on behind the scenes,” says Sabrit, adding: “We bring capital and structure, but we also support them as investors and participate in their investment committees.”

An example of this is its partnership with Cassio Calil, through which they recently launched a new mobility strategy that will invest in solutions related to mobile device financing, subscriptions and early updates.

Its clients are mainly UHNWI in Latin America, but they also offer solutions to US residents. “In the case of Brazilians, with rates of 14.5% it was difficult to imagine them taking risk in alternatives, but when rates dropped to 2% there was a change in mentality… [clients] began to look at alternatives and they also realized that they invest abroad,” recalls the manager.

The firm offers investors a wide range of strategies in real estate, credit, risk, liquid markets and other alternative asset classes. Regarding the situation generated by the COVID-19 pandemic, the manager mentions that “not everything is always rosy”, and that the parts related to hotels of both his real estate portfolio in the US and the one in Brazil were affected, but that “little by little they are recovering, and fortunately, we with the partners in this business we were able to cope”. For de Sabrit, being very transparent and explaining the situation to clients allowed them to maintain trust.

His team, which is close to 100 people, coming from different cultures and geographies, seeks to connect and leverage their local knowledge of the markets in which they invest “so that nothing is lost in translation.” Another advantage that he highlights is the ability of his team to originate operations and business, “which allows us to be one step ahead.”

The manager hopes to open an office in New York in the short term, which will be driven by a Venture Debt strategy in the US that has already had its first closure. By 2022 they are preparing a Permanent Capital Strategy for Real Estate in the United States, which will be available to the firm’s foreign investors, “allowing them to take advantage of the largest real estate market in the world, with professional management, and without sacrificing liquidity,” he mentions.

“We have significant ambitions and we want to grow three to four times to reach 8 billion in AUM in 2025,” Sabrit concludes.