Editor, Investment Strategy. Europe, Middle East and Africa, London
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Jan 24, 2013
via Global Investing

Weekly Radar: Managing expectations

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With a week to go in January, global stock markets are up 3.8 percent – gently nudging higher after the new year burst and with a continued evaporation of volatility gauges toward new 5-year lows. That’s all warranted by a reappraisal of the global economy as well as murmurs about longer-term strategic shifts back to under-owned and cheaper equities. But, as ever, you can never draw a straight line. If we were to get this sort of move every month this year, then total returns for the year on the MCSI global index would be 50 percent – not impossible I guess, but highly unlikely. So, at some stage the market will pause, hestitate or even take a step back. Is now the time just three weeks into the year?

Well lots of the much-feared headwinds have not materialized. The looming US budget ceiling showdown keeps getting put back – it’s now May by the way, even if another mini-cliff of sorts is due in March — but you get can-kicking picture here already. The US earnings season looks fairly benign so far, even given the outsize reaction to Apple after hours on Wednesday. European sovereign funding worries have proven wide of the mark to date too as money floods to Spain and even Portugal again. And Chinese data confirms a decent cyclical rebound there at least from Q3′s trough. All seems like pretty smooth sailing – aside perhaps from the UK’s slightly perplexing decision to add rather than ease uncertainty about its economic future. So what can go wrong? Well there’s still an event calendar to keep an eye on – next month’s Italian elections for example. But even that’s stretching it as a major bogeyman the likely outcome.

Jan 23, 2013

The Great Rotation: a flight to equities in 2013

LONDON (Reuters) – One of the big investment shifts of our day may be at hand – regardless of how global markets actually perform this year.

What’s already known as the “The Great Rotation” – a tilting of pension and insurance funds’ strategic, long-term asset preference back toward equity from extreme positioning in bonds – has been one of themes of the new year so far.

Jan 23, 2013

Analysis – The Great Rotation: a flight to equities in 2013

LONDON (Reuters) – One of the big investment shifts of our day may be at hand – regardless of how global markets actually perform this year.

What’s already known as the “The Great Rotation” – a tilting of pension and insurance funds’ strategic, long-term asset preference back toward equity from extreme positioning in bonds – has been one of themes of the new year so far.

Jan 18, 2013

Once wary markets warm to Merkel status quo

LONDON, Jan 18 (Reuters) – As the euro crisis raged at its
peak just over a year ago, few global investors reckoned Angela
Merkel’s re-election as German Chancellor this year was likely
or even desirable.

Now they appear to be assuming both – thanks partly to her
gaffe-prone Social Democrat opponent but perhaps as much or more
so to European Central Bank chief Mario Draghi and his success
in stabilising the teetering currency bloc last year.

Jan 17, 2013
via Global Investing

Weekly Radar: Market stalemate sees volatility ebb further

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Global markets have found themselves at an interesting juncture of underlying new year bullishness stalled by trepidation over several short-term headwinds (US debt debate, Q4 earnings, Italian elections etc etc) – the net result has been stalemate, something which has sunk volatility gauges even further. Not only did this week’s Merrill funds survey show investors overweight bank stocks for the first time since 2007, it also showed demand for protection against a sharp equity market drops over the next 3 months at lowest since at least 2008. The latter certainly tallies with the ever-ebbing VIX at its lowest since June 2007. Though some will of course now argue this is “cheap” – it’s a bit like comparing the cost of umbrellas even though you don’t think it’s going to rain.

Anyway, the year’s big investment theme – the prospect of a “Great Rotation” back into equity from bonds worldwide – has now even captured the sceptical eye of one of the market’s most persistent bears. SocGen’s Albert Edwards still assumes we’ll see carnage on biblical proportions first — of course — but even he says long-term investors with 10-year views would be mad not to pick up some of the best valuations in Europe and Japan they will likely ever see. “Unambiguously cheap” was his term – and that’s saying something from the forecaster of the New Ice Age.

Jan 11, 2013

The lure of emerging equity – step by step

LONDON, Jan 11 (Reuters) – Global investors seem happy to
slip back into riskier waters of emerging market equities once
again but it’s a step-by-step process and ways of staying in the
shallows are still being sought by many.

As reflationary policies of the world’s central banks have
sunk real yields on traditional safe-haven bonds into negative
territory, income-seeking investors have over the past year or
more pushed out to higher-yielding debt and “quality” western
blue chip stocks with hefty dividends.

Jan 10, 2013
via Global Investing

Weekly Radar: Q4 earnings, China GDP and German elections

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The first wave of Q4 US earnings, Chinese Q4 GDP  and European inflation dominate next week, while regional polls in Germany’s Lower Saxony the following Sunday give everyone a early peek at ideas surrounding probably the biggest general election of 2013 later in the year.

With a bullish start to the year already confirmed by the so-called “5 day rule” on Wall St, we now come to the first real test – the Q4 earnings season. There was nothing to rock the boat from Alcoa but we will only start to get a glimpse of the overall picture next week after the big financials like JPM, Citi and Goldman report as well as real sector bellwethers Intel and GE. Yet again the questions centre on how the slow-growth macro world is sapping top lines, how this can continue to be offset by cost cutting to flatter profits and – perhaps most importantly for investors right now – what’s already in the price.

Jan 9, 2013

Five-day rule flashes green on market’s ‘Groundhog Day’

LONDON (Reuters) – Seasonal bellwether or just hocus pocus, the first five trading days bode well for 2013.

Given the often unfathomable global risks facing investors at the start of any new year, it’s not hard to see the temptation of a few rules of thumb to parse the next 12 months.

Jan 9, 2013

Analysis: Five-day rule flashes green on market’s “Groundhog Day”

LONDON (Reuters) – Seasonal bellwether or just hocus pocus, the first five trading days bode well for 2013.

Given the often unfathomable global risks facing investors at the start of any new year, it’s not hard to see the temptation of a few rules of thumb to parse the next 12 months.

Jan 4, 2013

Central banks still hold all the cards

LONDON, Jan 4 (Reuters) – If the opening salvos of 2013 tell
investors anything, it’s to keep their eyes fixed on the world’s
central banks rather than its more volatile politicians or even
spluttering economies.

Given the U.S. Federal Reserve’s latest musings on Thursday
about how long it can safely sustain its current super-easy
monetary policy, that’s not as unambiguously positive as it
proved over the past 18 months.

    • About Mike

      "Mike Dolan is Reuters' Investment Strategy Editor in Europe. He has been a correspondent and editor for the past 20 years, working for Reuters from London and Washington DC in a variety of roles covering global policymaking, economics and investment trends."
      Joined Reuters:
      1995
      Awards:
      Reuters Editor of the Year, 2009. Reuters multimedia journalist of the year award, 2011
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