At Entext , we offer an economic strategy service with a proven track record of astute and timely market forecasting over recent years, by applying credit and liquidity cycle analysis to the key secular trends that are shaping the global investment environment.
'The credit markets have simply ceased to function meaningfully, and the real economic fallout of that seizure will soon become apparent. Meanwhile, equity market investors, tempted by spurious valuation metrics versus bonds, remain in denial as to the scale of the economic damage from the crash in credit markets and the brutal cyclical downgrades looming in earnings and dividend forecasts (as well as a structurally peaking profit/GDP ratio). As I noted a few weeks ago, consensus views this year on most assets from oil to emerging markets and the dollar have proved wealth destructive.' 30 September, 2008
'Oil has rallied on OPEC supply restrictions but remains below marginal production costs in the $60-65 area and above cash costs of $30-35, although at these levels many producers would face social upheaval. It seems too early for a break-out from the recent price range, at least until we get clearer evidence of demand picking up in the US and the scale of an accelerating Chinese economic slowdown is evident. Medium-term, of 100 key OPEC production projects announced in early 2008, 35 have been delayed; oil infrastructure spend is down 12-15% in a year, making a spike
in prices to $75-100 as global recovery takes hold in 2010 and beyond very likely. ' 18 March, 2009
'Over the last decade to end May 2010, EM Government Bonds returned almost 12% on an annualized basis, EM equities and REITs just over 10%, TIPS returned almost 8%, US bonds just over 6%, commodities 4%, cash just over 2% and US stocks...nothing. It was possible to own an asset mix that generated high single digit annual returns, so long as you avoided US (and other developed) stocks. Over the very long term the Equity Risk Premium, or the excess return over bonds you got paid for the additional risk, has been 2.5%. The reality is that the risk premium exists over very, very, long periods of time. In 2000 we began what may be a 16-18 year secular bear/sideways market that followed an 18 year bull market from a historically unprecedented level of equity market overvaluation on normalized earnings numbers. Though timing the exact starting point and ending point of a secular market is next to impossible, it is possible to determine a range based on the duration of the present market movement and valuations. The charts below looks at annualized 10 year real returns subsequent to a range of market P/E multiples; it seems absurdly obvious but is often forgotten that equity returns depend above all else on starting valuation.' 25 June, 2010
Proven Analysis
The strategy analysis team is led by Sean Maher, who holds a masters degree in economics and has worked over the last 20 years as an economist with CRU, the world's leading commodities consultancy, as a portfolio manager with RLAM, and in investment banking with WestLB and Nomura. He speaks regularly at industry events and is a member of the CFA Institute.
Macro Driven Investment Insight
Sean Maher speaking at the Pacific Basin Economic Council's April 2010 seminar on Chinese energy policy with Raymond Ch'ien CBE, Chairman of MTR Corporation and economic advisor to China's government, Prof. Lin Bo Qiang of Xiamen University.
Team
Presenting on the 2012 economic outlook at the GAP conference co-hosted by Killik & Co. and Seymour Pierce in London, November 2011
