http://icecapassetmanagement.com/wp-...al-Outlook.pdf
“I’ll show you who I am” And with that one line - the world of invisibility was born. The 1933 blockbuster film, “The Invisible Man” launched a genre that would span decades, producing many enjoyable and many unenjoyable movies of things and people we can’t see.
Next up was “The Invisible Man Returns”, followed by “The Invisible Man’s Revenge”, “The Invisible Boy”, “The Invisible Mom”, “The Invisible Mom 2”, and let’s not forget the Chevy Chase classic “Memoirs of an Invisible Man.” Through the humour, terror, and mystery, the one thing that was constant throughout these stories was - consistency. The consistency was in the way the story was told, the path it took and the usual predictable ending. Unseen and definitely unappreciated by most investors today, the global financial world is missing an important factor that is crucial to keeping the world humming along in a predictable pattern. A pattern that rewards success, punishes failure and then sets the scene to begin the cycle all over again.
This missing factor is none other than the Invisible Hand. January 2020 The Invisible Man Unfortunately, the Invisible Hand is hard to see. It’s never discussed by the media, big banks, and certainly never discussed by the central banks - after all, they’re the ones who caused it to go missing in the first place. As you sit back to enjoy and appreciate this latest edition of the IceCap Global Outlook, we ask you to use your vision to see and understand why today’s markets have been displaced, and what happens with the next great story - The Return of the Invisible Hand. Industry vs Markets 2019 was quite the year.
A few weeks after the New Years celebration, investment managers, advisors, and mutual fund salespeople around the world will eagerly explain to their clients what a fantastic year it was for their investment portfolios. For those invested solely in equities, most investors should see returns between +18% to +25%. For those invested solely in a regular bond fund, most investors should see returns between +5% and +8%. Yes, it was a really nice year. Unless of course you consider the starting point for measuring performance was the end of 2018, which just so happens to be a very low starting point. www.IceCapAssetManagement.com
The Recession Since 1967, the United States has experienced 7 different recessions. And since 1967, the Survey of Professional Forecasters collectively, have predicted exactly zero recessions. This 0% batting average can be interpreted two ways: 1) Collectively, this group isn’t very good at their job. 2) Forecasting or predicting recessions is next to impossible. Yet, the beat goes on. Recessions can be measured in different ways. The Professional Forecasters focus on a collective decline in industrial production, employment, real personal income and sales. A more common definition used by the big box banks and mainstream media is two consecutive quarters of negative GDP growth. Meanwhile the most popular definition of a recession is when YOU lose your job. What we do know, is that a normal economy moves in a cycle where there are highs and lows. The highs are the good times. While the lows are the bad times.
Everyone likes pizza this “Invisible Hand” as the discovery by Scottish economist Adam Smith, as a way to describe how an economy will function if governments left people alone to buy and sell freely amongst themselves.
If left alone, the prices of most goods and services would be determined by what people are willing (or able ) to pay. As an example, if all pizzerias are charging $20 for a pie eventually someone will enter the market and make the equivalent quality pizza and charge $15. This enterprising pizzeria will take customers away from everyone else, until they too decrease their prices to match the $15. Alternatively, another new pizzeria might look at this market and determine they can make a significantly better pie and charge $25. This enterprising pizzeria will take customers away from everyone else until they begin to match the higher quality. This movement of people making and eating pizza is being guided by an invisible hand - and it works.
Now, let’s consider what happens to the invisible hand if our dear governments saw what was happening and for whatever reason declared by law that no pizza could ever be sold for more than $10. In this case, several things happen. For starters, the pizzerias will have to find ways to reduce their costs to compensate for the lost revenues per pizza sold. Some will succeed but by only using even lower quality ingredients. Others will simply take a bow and close up shop. What happens next, is similar to what is happening in the financial world today. Now, as governments eat pizza like everyone else, eventually they realize that the quality of pizza has deteriorated and there are less pizzerias than what previously existed. Never to let a crisis go to waste, governments next announce they’ll pay each pizzeria $10 per pizza to compensate them for the lost revenues from not being able to charge the original price of $20. Two things have now happened. First, government involvement in setting prices has completely distorted the pizza industry. Second, the “invisible hand” has been completely blocked out and unable to keep the market in balance. Today, the exact same story is playing out in the world of interest rates.
Comrades When the financial world blew-up in 2008-09, governments and central banks around the world made a coordinated decision to become involved in uncountable ways to affect the monetary system. And in its most simplest forms - central banks have decided that instead of letting Adam Smith’s invisible hand determine the correct price of money (ie. interest rates), they would set the price of money. This price of money has ranged from NEGATIVE % across Europe and Japan, to near ZERO % across everywhere else.
This crowding out effect is having two effects on our money world: One - the economic cycle has been temporarily suspended. Two - zombie companies and governments now roam the lands. Recall how on page 5 we showed how a regular economic cycle weaves and bobs over time. The interference in interest rates by central banks has completely flattened cyclical economic movements and instead has changed the economic cycle to appear as a flat line - one characterized as having no growth and no contractions.
Some might say this is a good thing. Afterall, it would mean steady eddy economies, one characterized by consistency in everything. Yet, a successful flat-lined economy is one that doesn’t exist now, it hasn’t existed in the past and will not exist in the future. For those in disagreement, note that this kind of a controlled economy has been tried numerous times over the years. Those that tried include: The Soviet Union (Marxism-Leninism) Germany (Nazi National Socialism) China (Maoism Communism) Cuba (Communism) Venezuela (National Socialism) Each of these failed states attempted to eliminate the invisible hand from doing what it does best - rewarding economic success, or put another way, not rewarding economic failure. Unknown to most today, the global financial system has taken on economic characteristics of socialism/communism. And it is happening right before your eyes in the form of central banks setting interest rates at zero % and negative %, as well as their policies of printing money to help stimulate the economy. These monetary policies have been ongoing now globally for 10 years and while the creators of these policies hail them as a resounding success - others declare the opposite has happened.
As you can imagine - the world of finance is complicated. There are many markets, in many currencies with all trading in either public or private transactions. And within each of these many markets, there are many factors that have either a material or immaterial impact on pricing. And to make matters even more confounding, there are times when the material factors are material and other times when these very same factors are immaterial. However - there is always one factor that plays a significant role in helping market participants (and the invisible hand) determine an appropriate price.
This factor is interest rates. In the next column, we demonstrate how the sharpest and brightest minds in the industry have recognized that something is unusual, different, or uncertain. The cause of this uneasiness and confusion - the absence of the invisible hand. Translation: the invisible hand is missing from bond markets. Translation: the invisible hand is missing from financial modeling. Of course, the absence of the invisible hand is also having a dramatic effect on governments too. The worst kept secret on the planet is how all governments are unable to spend less than what they collect in taxes.
Even if it’s invisible, it’s easy to see As reminder, today’s debt was really used to buy stuff in the past. In other words, all this money spent on today’s debt servicing costs is for yesterday’s spending sins. Of course, considering education, social security and pension costs are growing significantly faster than the economy - expecting these governments to turn around and balance their books is foolishness at its finest.
To make matters even more clear, once the invisible hand reappears, interest rates will surge making the amount of debt servicing costs increase exponentially. In the world of finance, the interest on these borrowings MUST BE PAID FIRST.
Bond interest is paid before pension benefits. It’s paid before teachers’ salaries. And it’s even paid before the salaries of members of parliament, congress and other government workers. What this means is that when the invisible hand of interest rates returns to the world, there will be less money available to fund basic and critical government spending. And when this happens, the prices of bonds everywhere go down in value. Government bonds decline in value. The highest rated corporate bonds decline in value. And the flavour of the day - high yield and emerging market bonds decline in value. In some ways, economics has become a dismal science. Forecasting recessions and expansions and inflation and everything else with a number is difficult. Yet, one area of economics that isn’t difficult to understand is the science of cycles and the invisible hand.
Cycles and the invisible hand haven’t disappeared, they’ve just been hiding in the wings. Which means, two things have become CERTAIN in today’s economic world: 1) A recession is coming 2) Long-term interest rates are going higher. Which indicates, even if it’s invisible, it’s still easy to see.
Stay Calm Repo Markets Readers who follow markets closer than the average person know, but may not understand specifically why the repo crisis has started.
Meanwhile, readers who think they follow markets closely but are unaware of this repo crisis, should really pay attention. In very simple terms, the repo market is a $1 Trillion/day credit eating machine. Banks, quais-banks, shadow banks, investment managers and money market funds all borrow and lend to each other every day and then repeat the process again the next day. To avoid diving deep into a rabbit hole - just know that the premise behind repo markets is that one side will sell an asset (a bond for example) to another firm with the promise to repurchase that very same asset the next day at a slightly higher price. This transaction replicates a loan and it happens every single day. The effective rate of interest on these transactions is known as the repo rate.
Effectively, it is very close to the rate set by the US Federal Reserve for their over night rate. The reason this enormous market is unknown to practically most people in the investment world is because it is boring and never has a moment when it should attract attention. This all changed 5 months ago when this happened: Effectively, the interest rate on overnight borrowing through the repo market surged from 2% to 6% and then to 10%. At this point, the US Federal Reserve had to get involved and pumped billions of dollars into the market to help restore a sense of calmness. This is a big deal. Let’s make no mistake about it - it was so serious, that in order to ensure this key funding rate remained closer to the Fed Funds rate, the US Federal Reserve has been providing capital into the repo market every day since.
There is so much more The reasons provided for this highly unusual market reaction and subsequent US Federal Reserve reaction range from banks and companies requiring additional monies for quarterly tax payments, to blaming the US Treasury for returning to credit markets to fund their trillion dollar deficit.
IceCap is telling you there is something much more significant happening. The reason the repo crisis started was due to entities not accepting collateral from each other. For whatever reason, suddenly Bank A is telling Bank B that they will not lend to them overnight unless they agree to pay 10% interest. Put another way - a lack or diminished level of trust has returned to the banking system. The USD is the world’s reserve currency and it is used and needed by everyone around the world in one way or another. Therefore, believing this is an American banking problem is naïve.
IceCap has written and talked extensively about our lack of confidence in the European banking system. European banks operate in the repo market and in our opinion this is the epicentre of the crisis that is developing. As was demonstrated during the 2008-09 crisis, banks have no idea what other banks are holding on their balance sheets. We know for certain that Europe’s banking risks were never cleansed from the system. And here we are now after 10 years of negative rates, zero rates, bank and sovereign bailouts - maybe the invisible hand of the banking system is finally re-emerging. The repo crisis has our attention.
Actions by the US Federal Reserve is NOT a simple extension of money printing/quantitative easing as is being bantered by the media and talking heads. Quantitative easing targeted long-term interest rates. It’s objective was to make the cost of borrowing cheap which in turn would encourage borrowing and produce economic growth. This repo crisis is DIFFERENT. The Fed’s reactions towards the repo crisis is to ensure the banking sector regains enough confidence to ensure the enormous overnight lending market continues uninterrupted. Once trust leaves the banking system, it is very difficult to retrieve.
Stocks There have been plenty of reasons to dislike equity markets based upon fundamental factors. Yet IceCap continues to maintain that since the explicit interference in financial markets by our central banks and governments, fundamentals have become meaningless.
Our non-fundamental equity models remain very positive and have resulted in our portfolios maintaining our equity allocations over the past year. Having said that, once the data changes and our models produce different results so too will our allocations to equities.
Presently, we remain on downgrade alert and will continue to hold equity allocations.
Bonds There is not too much else to say about bond markets. In our opinion, every bond market is priced to perfection and this pricing has created severe asymmetric risk-return relations across the fixed income and bond spectrum. Chart top of next column illustrates how perfect corporate bond markets have been priced. Here we show you credit spreads and how they look relative to previous periods. If there’s a recession or surge in long-term rates, bond markets are toast.
January 2020 The Invisible Man Bloomberg Barclays US Aggregate Corporate Avg OAS Currencies No changes.
We are well aware of the myriad of reasons why investors believe the USD will decline rapidly and we continue to disagree. The global financial system has been bottled up now for 10 years and we are increasingly seeing signs that a crisis will re-emerge which will send foreign capital seeking safety in USD. Our portfolios remain well positioned to benefit from a rapidly appreciating USD. Commodities Gold remains on our want to buy list. We still expect it to have one more leg down when USD eventually strengthens rapidly. We remain patient.
IceCap Investment Solutions IceCap Global Managed Portfolios • Managed by IceCap Asset Management • Available for private clients and institutional investors • Separately Managed Portfolios consisting of Long-only strategies including equities, fixed income, currencies, volatility and commodities. • Contact directly: • Keith Dicker: [email protected] •
Or any team member below As always, we’d be pleased to speak with anyone about our investment views. We also encourage our readers to share our global market outlook with those who they think may find it of interest. Keith earned the Chartered Financial Analyst (CFA) designation in 1998 and is a member of the Chartered Financial Analysts Institute. He has been recognized by the CFA Institute, RealVision, MacroVoices, Reuters, Bloomberg, BNN and the Globe & Mail for his views on global macro investment strategies.
He is a frequent speaker on the challenges and opportunities facing investors today, and is available to present to groups of any size. Keith Dicker, CFA founded IceCap Asset Management Limited in 2010 and is the Chief Investment Officer. He has over 25 years of investment experience, covering multi asset class strategies including equities, fixed income, commodities & currencies.
January 2020 The Invisible Man www.IceCapAssetManagement.com
Our Team: Keith Dicker: [email protected] John Corney: [email protected] Haakon Pedersen: [email protected] Andrew Feader: [email protected] Conor Demone: [email protected]
“I’ll show you who I am” And with that one line - the world of invisibility was born. The 1933 blockbuster film, “The Invisible Man” launched a genre that would span decades, producing many enjoyable and many unenjoyable movies of things and people we can’t see.
Next up was “The Invisible Man Returns”, followed by “The Invisible Man’s Revenge”, “The Invisible Boy”, “The Invisible Mom”, “The Invisible Mom 2”, and let’s not forget the Chevy Chase classic “Memoirs of an Invisible Man.” Through the humour, terror, and mystery, the one thing that was constant throughout these stories was - consistency. The consistency was in the way the story was told, the path it took and the usual predictable ending. Unseen and definitely unappreciated by most investors today, the global financial world is missing an important factor that is crucial to keeping the world humming along in a predictable pattern. A pattern that rewards success, punishes failure and then sets the scene to begin the cycle all over again.
This missing factor is none other than the Invisible Hand. January 2020 The Invisible Man Unfortunately, the Invisible Hand is hard to see. It’s never discussed by the media, big banks, and certainly never discussed by the central banks - after all, they’re the ones who caused it to go missing in the first place. As you sit back to enjoy and appreciate this latest edition of the IceCap Global Outlook, we ask you to use your vision to see and understand why today’s markets have been displaced, and what happens with the next great story - The Return of the Invisible Hand. Industry vs Markets 2019 was quite the year.
A few weeks after the New Years celebration, investment managers, advisors, and mutual fund salespeople around the world will eagerly explain to their clients what a fantastic year it was for their investment portfolios. For those invested solely in equities, most investors should see returns between +18% to +25%. For those invested solely in a regular bond fund, most investors should see returns between +5% and +8%. Yes, it was a really nice year. Unless of course you consider the starting point for measuring performance was the end of 2018, which just so happens to be a very low starting point. www.IceCapAssetManagement.com
The Recession Since 1967, the United States has experienced 7 different recessions. And since 1967, the Survey of Professional Forecasters collectively, have predicted exactly zero recessions. This 0% batting average can be interpreted two ways: 1) Collectively, this group isn’t very good at their job. 2) Forecasting or predicting recessions is next to impossible. Yet, the beat goes on. Recessions can be measured in different ways. The Professional Forecasters focus on a collective decline in industrial production, employment, real personal income and sales. A more common definition used by the big box banks and mainstream media is two consecutive quarters of negative GDP growth. Meanwhile the most popular definition of a recession is when YOU lose your job. What we do know, is that a normal economy moves in a cycle where there are highs and lows. The highs are the good times. While the lows are the bad times.
Everyone likes pizza this “Invisible Hand” as the discovery by Scottish economist Adam Smith, as a way to describe how an economy will function if governments left people alone to buy and sell freely amongst themselves.
If left alone, the prices of most goods and services would be determined by what people are willing (or able ) to pay. As an example, if all pizzerias are charging $20 for a pie eventually someone will enter the market and make the equivalent quality pizza and charge $15. This enterprising pizzeria will take customers away from everyone else, until they too decrease their prices to match the $15. Alternatively, another new pizzeria might look at this market and determine they can make a significantly better pie and charge $25. This enterprising pizzeria will take customers away from everyone else until they begin to match the higher quality. This movement of people making and eating pizza is being guided by an invisible hand - and it works.
Now, let’s consider what happens to the invisible hand if our dear governments saw what was happening and for whatever reason declared by law that no pizza could ever be sold for more than $10. In this case, several things happen. For starters, the pizzerias will have to find ways to reduce their costs to compensate for the lost revenues per pizza sold. Some will succeed but by only using even lower quality ingredients. Others will simply take a bow and close up shop. What happens next, is similar to what is happening in the financial world today. Now, as governments eat pizza like everyone else, eventually they realize that the quality of pizza has deteriorated and there are less pizzerias than what previously existed. Never to let a crisis go to waste, governments next announce they’ll pay each pizzeria $10 per pizza to compensate them for the lost revenues from not being able to charge the original price of $20. Two things have now happened. First, government involvement in setting prices has completely distorted the pizza industry. Second, the “invisible hand” has been completely blocked out and unable to keep the market in balance. Today, the exact same story is playing out in the world of interest rates.
Comrades When the financial world blew-up in 2008-09, governments and central banks around the world made a coordinated decision to become involved in uncountable ways to affect the monetary system. And in its most simplest forms - central banks have decided that instead of letting Adam Smith’s invisible hand determine the correct price of money (ie. interest rates), they would set the price of money. This price of money has ranged from NEGATIVE % across Europe and Japan, to near ZERO % across everywhere else.
This crowding out effect is having two effects on our money world: One - the economic cycle has been temporarily suspended. Two - zombie companies and governments now roam the lands. Recall how on page 5 we showed how a regular economic cycle weaves and bobs over time. The interference in interest rates by central banks has completely flattened cyclical economic movements and instead has changed the economic cycle to appear as a flat line - one characterized as having no growth and no contractions.
Some might say this is a good thing. Afterall, it would mean steady eddy economies, one characterized by consistency in everything. Yet, a successful flat-lined economy is one that doesn’t exist now, it hasn’t existed in the past and will not exist in the future. For those in disagreement, note that this kind of a controlled economy has been tried numerous times over the years. Those that tried include: The Soviet Union (Marxism-Leninism) Germany (Nazi National Socialism) China (Maoism Communism) Cuba (Communism) Venezuela (National Socialism) Each of these failed states attempted to eliminate the invisible hand from doing what it does best - rewarding economic success, or put another way, not rewarding economic failure. Unknown to most today, the global financial system has taken on economic characteristics of socialism/communism. And it is happening right before your eyes in the form of central banks setting interest rates at zero % and negative %, as well as their policies of printing money to help stimulate the economy. These monetary policies have been ongoing now globally for 10 years and while the creators of these policies hail them as a resounding success - others declare the opposite has happened.
As you can imagine - the world of finance is complicated. There are many markets, in many currencies with all trading in either public or private transactions. And within each of these many markets, there are many factors that have either a material or immaterial impact on pricing. And to make matters even more confounding, there are times when the material factors are material and other times when these very same factors are immaterial. However - there is always one factor that plays a significant role in helping market participants (and the invisible hand) determine an appropriate price.
This factor is interest rates. In the next column, we demonstrate how the sharpest and brightest minds in the industry have recognized that something is unusual, different, or uncertain. The cause of this uneasiness and confusion - the absence of the invisible hand. Translation: the invisible hand is missing from bond markets. Translation: the invisible hand is missing from financial modeling. Of course, the absence of the invisible hand is also having a dramatic effect on governments too. The worst kept secret on the planet is how all governments are unable to spend less than what they collect in taxes.
Even if it’s invisible, it’s easy to see As reminder, today’s debt was really used to buy stuff in the past. In other words, all this money spent on today’s debt servicing costs is for yesterday’s spending sins. Of course, considering education, social security and pension costs are growing significantly faster than the economy - expecting these governments to turn around and balance their books is foolishness at its finest.
To make matters even more clear, once the invisible hand reappears, interest rates will surge making the amount of debt servicing costs increase exponentially. In the world of finance, the interest on these borrowings MUST BE PAID FIRST.
Bond interest is paid before pension benefits. It’s paid before teachers’ salaries. And it’s even paid before the salaries of members of parliament, congress and other government workers. What this means is that when the invisible hand of interest rates returns to the world, there will be less money available to fund basic and critical government spending. And when this happens, the prices of bonds everywhere go down in value. Government bonds decline in value. The highest rated corporate bonds decline in value. And the flavour of the day - high yield and emerging market bonds decline in value. In some ways, economics has become a dismal science. Forecasting recessions and expansions and inflation and everything else with a number is difficult. Yet, one area of economics that isn’t difficult to understand is the science of cycles and the invisible hand.
Cycles and the invisible hand haven’t disappeared, they’ve just been hiding in the wings. Which means, two things have become CERTAIN in today’s economic world: 1) A recession is coming 2) Long-term interest rates are going higher. Which indicates, even if it’s invisible, it’s still easy to see.
Stay Calm Repo Markets Readers who follow markets closer than the average person know, but may not understand specifically why the repo crisis has started.
Meanwhile, readers who think they follow markets closely but are unaware of this repo crisis, should really pay attention. In very simple terms, the repo market is a $1 Trillion/day credit eating machine. Banks, quais-banks, shadow banks, investment managers and money market funds all borrow and lend to each other every day and then repeat the process again the next day. To avoid diving deep into a rabbit hole - just know that the premise behind repo markets is that one side will sell an asset (a bond for example) to another firm with the promise to repurchase that very same asset the next day at a slightly higher price. This transaction replicates a loan and it happens every single day. The effective rate of interest on these transactions is known as the repo rate.
Effectively, it is very close to the rate set by the US Federal Reserve for their over night rate. The reason this enormous market is unknown to practically most people in the investment world is because it is boring and never has a moment when it should attract attention. This all changed 5 months ago when this happened: Effectively, the interest rate on overnight borrowing through the repo market surged from 2% to 6% and then to 10%. At this point, the US Federal Reserve had to get involved and pumped billions of dollars into the market to help restore a sense of calmness. This is a big deal. Let’s make no mistake about it - it was so serious, that in order to ensure this key funding rate remained closer to the Fed Funds rate, the US Federal Reserve has been providing capital into the repo market every day since.
There is so much more The reasons provided for this highly unusual market reaction and subsequent US Federal Reserve reaction range from banks and companies requiring additional monies for quarterly tax payments, to blaming the US Treasury for returning to credit markets to fund their trillion dollar deficit.
IceCap is telling you there is something much more significant happening. The reason the repo crisis started was due to entities not accepting collateral from each other. For whatever reason, suddenly Bank A is telling Bank B that they will not lend to them overnight unless they agree to pay 10% interest. Put another way - a lack or diminished level of trust has returned to the banking system. The USD is the world’s reserve currency and it is used and needed by everyone around the world in one way or another. Therefore, believing this is an American banking problem is naïve.
IceCap has written and talked extensively about our lack of confidence in the European banking system. European banks operate in the repo market and in our opinion this is the epicentre of the crisis that is developing. As was demonstrated during the 2008-09 crisis, banks have no idea what other banks are holding on their balance sheets. We know for certain that Europe’s banking risks were never cleansed from the system. And here we are now after 10 years of negative rates, zero rates, bank and sovereign bailouts - maybe the invisible hand of the banking system is finally re-emerging. The repo crisis has our attention.
Actions by the US Federal Reserve is NOT a simple extension of money printing/quantitative easing as is being bantered by the media and talking heads. Quantitative easing targeted long-term interest rates. It’s objective was to make the cost of borrowing cheap which in turn would encourage borrowing and produce economic growth. This repo crisis is DIFFERENT. The Fed’s reactions towards the repo crisis is to ensure the banking sector regains enough confidence to ensure the enormous overnight lending market continues uninterrupted. Once trust leaves the banking system, it is very difficult to retrieve.
Stocks There have been plenty of reasons to dislike equity markets based upon fundamental factors. Yet IceCap continues to maintain that since the explicit interference in financial markets by our central banks and governments, fundamentals have become meaningless.
Our non-fundamental equity models remain very positive and have resulted in our portfolios maintaining our equity allocations over the past year. Having said that, once the data changes and our models produce different results so too will our allocations to equities.
Presently, we remain on downgrade alert and will continue to hold equity allocations.
Bonds There is not too much else to say about bond markets. In our opinion, every bond market is priced to perfection and this pricing has created severe asymmetric risk-return relations across the fixed income and bond spectrum. Chart top of next column illustrates how perfect corporate bond markets have been priced. Here we show you credit spreads and how they look relative to previous periods. If there’s a recession or surge in long-term rates, bond markets are toast.
January 2020 The Invisible Man Bloomberg Barclays US Aggregate Corporate Avg OAS Currencies No changes.
We are well aware of the myriad of reasons why investors believe the USD will decline rapidly and we continue to disagree. The global financial system has been bottled up now for 10 years and we are increasingly seeing signs that a crisis will re-emerge which will send foreign capital seeking safety in USD. Our portfolios remain well positioned to benefit from a rapidly appreciating USD. Commodities Gold remains on our want to buy list. We still expect it to have one more leg down when USD eventually strengthens rapidly. We remain patient.
IceCap Investment Solutions IceCap Global Managed Portfolios • Managed by IceCap Asset Management • Available for private clients and institutional investors • Separately Managed Portfolios consisting of Long-only strategies including equities, fixed income, currencies, volatility and commodities. • Contact directly: • Keith Dicker: [email protected] •
Or any team member below As always, we’d be pleased to speak with anyone about our investment views. We also encourage our readers to share our global market outlook with those who they think may find it of interest. Keith earned the Chartered Financial Analyst (CFA) designation in 1998 and is a member of the Chartered Financial Analysts Institute. He has been recognized by the CFA Institute, RealVision, MacroVoices, Reuters, Bloomberg, BNN and the Globe & Mail for his views on global macro investment strategies.
He is a frequent speaker on the challenges and opportunities facing investors today, and is available to present to groups of any size. Keith Dicker, CFA founded IceCap Asset Management Limited in 2010 and is the Chief Investment Officer. He has over 25 years of investment experience, covering multi asset class strategies including equities, fixed income, commodities & currencies.
January 2020 The Invisible Man www.IceCapAssetManagement.com
Our Team: Keith Dicker: [email protected] John Corney: [email protected] Haakon Pedersen: [email protected] Andrew Feader: [email protected] Conor Demone: [email protected]