Category: General (Page 13 of 17)

A key sector takes it on the chin…

The US technology sector has been a key leader in the US stock market for the past several years, and this year has been no exception. Yet, the past few weeks have seen a number of dominant technology companies’ stock prices stumbling while the broader market continues to rise. The sector has given back quite a bit of outperformance in a short period of time as the market appears to be rotating away from more growth-oriented toward more value-oriented sectors. The question remains whether the technology sector is simply consolidating outsized gains or does this truly mark a change in market leadership. Technology valuations are trading at a premium to the overall stock market, but not at historical extremes. So, for the time being we view the past few weeks as a healthy consolidation and we will continue to monitor this key position.

This is a great opportunity for worthy charitable causes that address social and economic justice, health and welfare, the arts, etc. to be in the spotlight on a day for giving. ‘Tis truly the season. The problem is that the need is not only once a year. We stuff the shelves at food pantries for Thanksgiving and Christmas but hunger is a year-round problem. We create this day for giving, but the good works of all these amazing organizations are 365. That charitable spotlight today is bright but it is crowded. It is extremely difficult for every worthy cause to get attention, and with too many hands out at one time donors will tend to concentrate on the few and the favorites.

In the last couple weeks we launched the WCM Charitable Fund, a donor advised fund, in partnership with the Triskeles Foundation. Continue reading

It appears that, after consolidating gains relative to global equities over the past several weeks, emerging market stocks are regaining momentum and market leadership. Emerging market equities, particularly in Asia, have many attractive traits including stronger economic and earnings growth as well as favorable valuation readings. Expectations of stronger economic activity in the developed world should also continue to be supportive of emerging market stocks going forward.

After trailing the developed equity markets of Europe, Asia and the Far East (EAFE) for much of the first three quarters of 2017, US stocks have outperformed so far this quarter. Part of international stock market outperformance was attributed to dollar weakness in the earlier part of the year. The dollar has now stabilized and that, along with continued improvement in economic conditions and a supportive fundamental backdrop, should be fuel for further stock market gains.

Have a great holiday week!

With a great deal of excitement and pride during this giving season, we announce the launch of the WCM Charitable Fund in partnership with the Triskeles Foundation.

Every decision about how to deploy money is a capital allocation decision. Whether it is buying a house, investing in the markets, or making a philanthropic gift, our clients direct capital with intentionality and the expectation of a tangible and measurable result, whether it is making a home for family, growing wealth, or supporting good works in the community and the world at large. Even though the decision-making processes are similar, people rarely consider how their motivations for spending and investing might intersect with their motivations for giving and volunteering. Wilde Capital Management believes in the integration of a sense of purpose with both investing and charitable giving, and launched the WCM Charitable Fund to bring it all together.

Continue reading

Volatility readings in the US, as measured by the VIX index, have been trending downward for the better part of two years. However, after reaching a 12-year low on September 29, the VIX or “fear gauge” has climbed over 18% in the past six weeks. Heightened volatility readings can be self-reinforcing and erode investor confidence. Eyes on this key market barometer.

It is with profound sorrow that we make note of the passing of a dear friend and colleague, Harold Yuen, this past weekend. During much of our time as a team in UBS Investment Management, Harold served as the General Counsel to our business. He was always gracious, often humorous, and occasionally bitingly (and deservedly) sarcastic dealing with us. We learned an immense amount from him about how to operate an advisory business in a way that was true to all stakeholders, from our clients to their advisors to the firm and to regulators. At the same time, he taught us how to differentiate between responsible and ridiculous, striking an appropriate balance between observing and honoring the law and letting it suffocate the work we were trying to do for our constituents. It might be best summarized as the practical practice of securities law.

During that time, we also got to be friends and had the opportunity to share in the joys of his life like hearing about his kids’ achievements, and marvel at his extraordinary resilience and spirit as he battled his illness.

This week we say goodbye, but also thank you. He enriched us personally with his friendship, and indelibly suffused what we do as professionals and investors with a sense of both propriety and pragmatism that informed everything we did at UBS, and everything we now do at WCM. Harold, thank you for your friendship and thank you for your counsel. Love ya, man.

— Doug, Jonathan and Mark

We still believe that, longer term, the probability the Euro/USD exchange rate heads towards 1.30-1.35 is a reasonable expectation based on signs that the region’s economy is mending.  However, recent developments have sent the Euro lower versus the dollar.  Much of the weakness may be attributed to the Spanish federal government’s decision to dissolve Catalan regional autonomy, which has created a considerable amount of social unrest.  The Euro is currently trading around 1.16 which is critical because it is below its intermediate term trend and sentiment could force it even lower.

At CityWire USA’s recent West Coast conference, several “gatekeeper” attendees were asked followup questions after a conference survey about views on international equities, high yield bonds, and our perennial favorite — what could take this market out. WCM’s views are captured in this excellent synopsis along with the perspectives of several esteemed colleagues across the industry. As we are always quick to point out, it is important to our process not just to be in touch with what we think but also what everyone else has on their minds.

If you have access to the site, the article can be viewed here. Otherwise, follow this link to read a downloaded PDF version of the article.

Gatekeepers gravitate to international equities, exit high yield | Citywire

I have two Salvador Dali prints hanging near the front door, perhaps to remind me that the surreal is present everywhere. This afternoon hearing and reading reports from Catalonia my thoughts kept wandering back to the image of the burning giraffes in this Catalan’s work. In the space of hours, we went from President Puigdemont and the Catalan Parliament declaring an independent and sovereign state to PM Rajoy invalidating the declaration and moving to dissolve the regional government. The EU and many of its individual members declared an ongoing commitment to Spain as a unified member state. Desires to restore and expand provincial autonomy that Catalans had tasted and lost multiple times over the last century come into direct conflict with Madrid’s desire for control and stability and Europe’s greater vision of unity and harmony. Nationalistic and nativistic impulses have been on the rise across Europe, but where the boundaries are drawn depends on who holds the pen.

The Euro showed further weakness this week, perhaps in anticipation. What this will mean for US investors is uncertain. Catalonia accounts for a significant percentage of Spain’s GDP, but Spain as a whole is only 6% of the investable MSCI Europe Index. Any trajectory other than peaceful discussion and accommodation will hurt Spain’s economy, but that in itself does not seem to pose a major investment risk for diversified international investors. However, the potential for contagion to other provinces of Spain and beyond their borders to other parts of Europe that historically enjoyed separate identities could be profoundly disruptive to border permeability, travel, trade, currency and other factors that have made Europe increasingly attractive as an investment prospect in the last year.

This will be an interesting weekend. Keep your eye on the giraffes.