December 2014
Winning with the Collapse in Oil
TAM portfolios provide protection in the oil sell-off. “I’ve been on both sides of a lot of oil and gas price swings. Every time, the first question people always ask is who wins and who loses” - T. Boone Pickens, founder and chair of BP Capital. The price of oil has fallen over 40% in recent months with inevitable knock on effects to the price of shares in oil stocks. Over one month, the FTSE All Share Oil and Gas producers have fallen 15% and the Service and Equipment sector has fallen an astonishing 29%. Mining stocks have also fallen...
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November 2014
Has Santa tried to derail the economy?
The state of New York is no stranger to freak weather conditions but the current winter storm hitting the eastern sea board has already seen over 10 fatalities, thousands stranded in airports covered in snow and the National Guard called out. This time around it seems more than the Fifth Avenue shoppers who are going to have to take cover. No country on earth is immune from freak weather, nor are they immune from the financial and economic impacts Mother Nature leaves in her wake. The US at present has a very imbalanced set of asset distributions with an attributed...
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October 2014
Weighing it up
When you are in deep conflict about something, sometimes the most trivial thing can tip the scales. Ethel Merman Stock markets appear to have regained some poise after a few frantic weeks that saw the FTSE100 fall around 10%, and 10-year Gilt yields, which move inversely to Gilt prices, fall from 2.5% to below 2% as investors were attracted by the perceived safe haven of Government bonds in response to a growth scare that could stave off interest rate hikes until after the election. The last few trading sessions have reversed around half those moves but a nervous mood has...
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October 2014
Bill Gross "King of Bonds"
“Begin at the beginning," the King said, very gravely, "and go on till you come to the end: then stop.” Lewis Carroll, Alice in Wonderland In 1992, President Clinton’s adviser, James Carville, said that he wanted to be reincarnated as the bond market. Using more colourful language than we can publish here, he was expressing his view that in the earliest months of his Presidency, Clinton appeared to think bond markets were more important than taxes and even the Pope. But to many investors Bill Gross “the king of bonds” WAS the living embodiment of the bond market for four...
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September 2014
Japan - Beware of Bull
TAM clients may have noticed the successful investment into Japanese equities bought earlier in the Spring. At the time, we believed that the market had fallen unjustly out of favour and trading at levels we considered cheap relative to its western peers. With the Nikkei 225 Index up around 13% from the lows, we ask if this is still the case and what we can expect for the rest of the year and beyond. Leaving aside the bull case for now, let’s deal with the bad news that seems to have an unusually large following. It is true that deflation,...
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August 2014
Walking around the bear
“There’s nothing like an airport for bringing you down to earth” Richard Gordon Over the last couple of years, the list of things to worry about has grown ever longer but it’s been interesting to watch stock and bond markets ignore virtually all of them except for brief periods when it suited short term punters to cause a bit of trouble regardless of whether a new drama impacted the economy or not. This was initially true of the unfolding situation in Ukraine. The annexation of Crimea, for example, came and went without any market reaction and the S&P500 went on...
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July 2014
MH17 - Realpolitik in action
The real trouble with liars is that there is never any guarantee against their occasionally telling the truth. Kingsley Amis The weekend’s 24-hour coverage of the downing of the Malaysian Airlines flight MH17 has revealed little about what the West intends to do about it. Whilst Putin has been placed in the dock by the media, it seems that, contrary to what David Cameron is pushing for, it’s business as usual in Moscow. This is unsurprising since Russia was already weathering the limited sanctions being imposed upon it and has seemingly escaped the EU’s notice of further punishment for annexing...
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June 2014
Slamming the door before the horse bolts
Could the Fed stop investors from exiting bond funds? You've got to sit up and take notice when you hear that Federal Reserve officials have been discussing measures to avert a potential run on bond funds. Lurking beneath a few of the newspaper headlines and buried on the inside pages is one of those articles which becomes more alarming as you read on and it starts to feel like a potential time bomb. It seems that the Federal Reserve is mulling the idea of imposing exit fees on US bond funds in order to counter the threat of a run...
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June 2014
Bond Yields - That sinking feeling
Should we be concerned that government bond yields remain near historic lows? In 2013 expectations that the US Federal Reserve would reduce (or ‘taper’) their quantitative easing program added to speculation that interest rate hikes would surely follow. This was an obvious catalyst for yields to rise on US government bonds. And rise they did. By the end of 2013 the yield on the ten-year Treasury bond had risen from a brief low of 1.7% to above 3.0%, its highest level since 2011. But now, mid-2014, despite three initial rounds of tapering plus modest signs of economic growth and equity...
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June 2014
The Scottish Referendum - What would Paul say?
Who remembers Paul the Octopus from the 2010 World Cup in South Africa? He shot to fame for his uncanny ability to pick the winners of matches throughout the tournament, including the final itself between Spain and the Netherlands. Remarkably, when presented with a choice of two boxes containing identical food but with the flags of the two competing nations, he correctly “predicted” the outcome of 11 of 13 matches. With the gap between the Scottish Yes and No vote narrowing, we wonder which way Paul would have voted ahead of the referendum on 19th September? If we look at...
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April 2014
The year that never was (April 2013 - March 2014)
On the face of it, there was a lot going on during the year. Global markets dealt with a US government shut down, Federal Reserve tapering, Chinese economic slowdown and an emerging market rout. Closer to home, we had the never ending eurozone saga to deal with and, just in case anyone was getting a little bored with it all, it’s all kicked off in Ukraine and we have the alarming prospect of a new “war” being seriously discussed for the first time in decades. There are reasons to be cheerful however. Cheap money is still sloshing around the system,...
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March 2014
Bull vs the Great Bear
Is it time for the bulls to hold their nerve as the Great Bear stirs? It is understandable that, on the face of it, headline news of Russia invading a sovereign nation on the borders of the EU may give rise to some alarm for investors, but the media has been positively revelling in the word “Invasion!” as Russian President Putin dispatched 6,000 Russian troops to key strategic Russian assets in the Crimea. However, we believe that this is a limited strategic move by Russia to protect what it sees as its direct assets and that whilst we are not...
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January 2014
TAM Outlook for 2014
Equities higher, government debt uninspiring; more of the same? The start of the long awaited withdrawal of Fed stimulus for the bond market is upon us and will have ramifications for global markets if handled badly. But, like an energy drink, the stimulating effects saw equity markets finish 2013 on a high from which they seem reluctant to come down. It was inevitable that the Federal Reserve would begin to wean markets off the unprecedented $80 billion a month bond buying program built up over the past four years. Both the Federal Reserve and Bank of England will have to...
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May 2014
35 percent - how low can you go?
On the face of it, there was a lot going on during the year. Global markets dealt with a US government shut down, Federal Reserve tapering, Chinese economic slowdown and an emerging market rout. Closer to home, we had the never ending eurozone saga to deal with and, just in case anyone was getting a little bored with it all, it’s all kicked off in Ukraine and we have the alarming prospect of a new “war” being seriously discussed for the first time in decades. There are reasons to be cheerful however. Cheap money is still sloshing around the system,...
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