Robert Schlafer

Hi Detlef the best post yet! Adding the #ETF wrapper by more traditional managers is a no brainer. As you say it's enhanced distribution & modern #ecommerce & access to new clients #mutualfunds cant reach ie Neo-brokers & roboadvisers. Let's not forget the tax benefit Irish ETFs have over UCITS mutual funds, 15% WHT v 30%. As I says its a no brainer. HANetf is a barometer of demand and all I can say is that enquiries by #assetmanagers have risen from 1% to over 40% in the last 12 months for #activeetfs and we have near 2 handfuls for over 6 managers at the CBI. One of these was picked up by @etfstream 2 weeks ago Guiness Global Investors. Many more to come!

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The ECB was “not looking at a single indicator”… hopefully We are not looking only at ECB 🧐 ECB president Christine Lagarde said Thursday’s decision to lower the benchmark deposit rate for the second time this year was “unanimously decided” — unlike the previous cut in June, when Austria’s central bank head Robert Holzmann dissented “Labour cost pressures are moderating, and profits are partially buffering the impact of higher wages on inflation,” the ECB said on Thursday. “Financing conditions remain restrictive, and economic activity is still subdued, reflecting weak private consumption and investment.” Lagarde signalled more rate cuts were expected but downplayed the likelihood a one at its next meeting in October. The ECB president said there was a “relatively short period of time” until then and, while inflation was likely to fall in September, the ECB was “not looking at a single indicator”. In new quarterly projections, the ECB estimated growth of 0.8 per cent this year — down marginally on June’s 0.9 per cent forecast. It similarly trimmed its estimate for 2025 from 1.4 per cent to 1.3 per cent, citing “a weaker contribution from domestic demand over the next few quarters”. (FT)

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ECB CUTS RATES? WILL IT DO MORE? One cut doesn’t necessarily make for a starting gun. While the ECB became the second G7 central bank to cut rates, it is by no means certain that it will follow through with more than one cuts this year. A rate cut cycle faces two headwinds.   For one, inflation ticked up in the Eurozone last month. While prices of goods have been lower, services inflation remains sticky. We are at a point where China is deliberately lowering export prices to capture market share. One way or another, this practice has a time limit. If services inflation hasn’t come down by then, Europe could find itself having to raise rates again. Second, even if prices continue to come down, the ECB still depends on the Fed. If Christine Lagarde lowers rates before the Fed has kicked off, she risks significant capital flight towards higher yielding savings accounts in Dollars, not to mention importing inflation from goods and commodities priced in Dollars. #ECB #Interestrates #economy #europe

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🇮🇳 MS + Apple = $6.14T ( BSE Mcap @ $5T). 🇨🇳 MS + Apple + Nvidia = $9.2T (Shanghai Index $9T Mcap). Marketcap of a single company is > 50% of Sensex Mcap. Case in place : Tech companies MS, Apple and Nvidia. Part 1. 🇮🇳 The combined market capitalization of the two most valued companies in the world – Microsoft and Apple – has overtaken the total market capitalization of the 3,851 listed companies on the Bombay Stock Exchange. Part 2. 🇨🇳 Furthermore, the market value of the US’ top three valuable companies – Microsoft, Apple, and Nvidia – is now bigger than that of the 5,300+ companies on the Chinese stock exchange, data showed. Microsoft and Apple, with a combined market capitalization of $6.14 trillion, have surpassed the entire worth of actively traded companies on the Bombay Stock Exchange, which stands at $5.06 trillion. But what’s changed : MS or Microsoft : With the growing importance of artificial intelligence (AI), Microsoft has been investing in OpenAI and is implementing AI features in its all its products and services. This investor fascination with the introduction of AI in workspaces has helped its shares skyrocket to all-time highs. Apple's rise this year hasn't been the smoothest. Pressured by concerns over cooling iPhone demand in China and a hefty $2 billion fine from the European Union, the California-headquartered major seemed to be in a tight spot. So , Apple not so hot anymore ? Apple shares have managed to regain their lost positivity in 2024, climbing 7 percent in a month, as investors regain an upbeat sentiment in the company. Although , iPhone sales dropped 8 percent in China in the first three months. Interestingly, overall sales fell in every geographic region barring Europe. Nvidia achieved an extraordinary milestone after its market capitalization soared to an astonishing $3 trillion, making it the very first computer chip firm to do so. China 🇨🇳 pipped too. The three most valuable tech firms have amassed a collective market capitalization of $9.2 trillion, outpacing China as well, whose total value of listed entities is $8.85 trillion. Interestingly, the Tim Cook-led Apple was the first U.S. company to reach a $3 trillion market cap in January 2022. Microsoft reached the milestone only in 2024. Nvidia passed the $2 trillion valuation in February 2024, and it only took about three months to touch the $3 trillion mark. The company hasn't shown signs of slowing down. Its CEO Jensen Huang, during a call, told investors that "fundamentally, the conditions are excellent for continued growth" in 2025 and beyond. Conclusion : The demand for Nvidia’s GPUs will remain high due to generative AI demands and an industry-wide shift away from central processors. Seems like there is no stopping NVIDIA.

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European Fund distribution Interesting recent analysis from EFAMA. As everyone already knows, distribution in Europe is dominated by the big banks. What really drew my attention though, was a comment from them saying "The pivotal role of banks in fund distribution within the EU cannot be overstated. They serve as primary advisers to clients seeking to diversify their savings from deposits into investment funds." Are you fu*king kidding me. The primary role of banks in Europe is to fill their pockets, flog their own products to investors and keep a stranglehold on distribution to ensure products like ETFs are kept at arms length. BLACKWATER #etfs #etf #assetmanagement #investmentmanagement #education

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Another thought-provoking article in the Financial Times by Chris Newlands suggests that the definition of the super-rich is shifting from $30 million to over $100 million in spare cash. The financial threshold has changed considerably, highlighting both the rise in global wealth and the evolving standards for what it means to be included in this exclusive group.   At Octagon UAE, as a Family Office as a Service company, we recognise this trend and offer our support both to those who may not meet the ultra-rich threshold but wish to experience the same level of service, and to those who fall under the new super-rich classification.    As the wealth management space evolves, not only are the definitions of rich and super-rich changing, but the entire ecosystem is experiencing transformation, and we are happy to be at the forefront of these developments.   Read the full article here: https://lnkd.in/duMic5Un   #FamilyOffices #Octagon #UHNW #FOAS

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CURRENCIES FOCUS - JUNE 2024❗️ By Guy ERTZ 📖🖊️ Summary 1️⃣ The US dollar index (DXY) depreciated 1.6% in May while the Euro index (EXY) remained flat. Currency volatility remained low. The market is positioning for wider swings as elections in the US approach (November 2024). 2️⃣ In the US, we still see one rate cut in 2024 in September. We forecast 4 cuts in 2025. The Europe the ECB announced its first rate on June 6th. We still anticipate two more rate cuts this year, and three cuts in 2025. We maintain our 3-month EURUSD target at 1.06 due to election uncertainty in Europe and keep our 12-month target at 1.12. 3️⃣ With low volatility in the FX market, the Mexican Peso should remain strong on the back of carry trades. The yield differential is likely to continue to be supportive. We now expect Mexican rates to reach 9.75% (vs 9.5% previously) late 2024. Relative political stability and nearshoring momentum also support the MXN. We decrease our USDMXN 3-month target from 17.5 to 17 and our 12-month target from 18.5 to 17.5. That suggests less depreciation potential for the MXN. 4️⃣ The yield differential supported the USD relative to the Yen (JPY) over recent months. Support for the JPY should come later this year as the Fed is set to cut rates and the BoJ to gradually increase the policy rate (as of September). We maintain our USDJPY 3-month target at 150 and our 12-month target at 140 (value of one US dollar). Enjoy this exciting read📖❗️ #bnpparibas #wealthmanagement #privatebanking #markets #economy #strategy #articles BNP Paribas Wealth Management - Private Banking

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Federal Reserve's Response to ECB's Cut: Impact on US Economy Discover the potential consequences of the ECB's cut on the Federal Reserve's actions. With inflation concerns rising, learn about the expected rate cuts and their timing. Stay informed on the latest economic developments. #ECB #FederalReserve #USInflation #RateCuts #EconomicDevelopments #USAEconomy #GlobalMarkets #MonetaryPolicy #CentralBanks #FinancialNews

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C’est la vie: Bond vigilantes are back 👨‍🎓 This is the headline in the new blog post by Jesper Rangvid “A bond vigilante is a bond trader who threatens to sell, or actually sells, a large amount of bonds to protest or signal distaste with policies of the issuer” Bond vigilantes have returned—this time in France. By 2034, France is expected to have the second-highest debt ratio in the EU. It already has EU’s highest spending on ageing, partly due to its low retirement age. Amid political uncertainty, bond vigilantes have taken notice, resulting in a significant milestone: France now faces higher borrowing costs than Spain, a country severely impacted by the European sovereign debt crisis in 2012. Although the effects are not yet dramatic, the developments serve as a cautionary signal for other nations with similarly unsustainable debt paths, including the United States. While Italian and Spanish yield spreads towards Germany are currently below (Italy) or at (Spain) their 2022 levels, the French yield spread has doubled and now exceeds that of Spain. This remarkable shift reflects a combination of concerns over France’s debt trajectory and political uncertainty.

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Why the Blokland Smart Multi-Asset Fund does not invest in commodities. I often get the question: 'Why does the Blokland Smart Multi-Asset Fund not invest in commodities?' My short answer: 'Commodities, as a group, are not intrinsically scarce.' The fund's philosophy is to invest in the exact opposite of assets with massive supply and are over-represented in the investment universe. Hence, it stays away from debt and bonds (which will see lower returns, higher volatility, and fewer diversification benefits) and invests in assets that are hard to create, issue, or mine, like quality stocks, gold, and Bitcoin. Commodities do not fit that definition. A mixed bag Take the Bloomberg Commodity Index. It looks like this: Energy ~ 30% Grains ~ 23% Precious Metals ~ 19% Industrial Metals ~ 15% Soft Commodities ~ 7% Livestock ~ 5% In nearly all cases, when investors allocate to Commodities, they do so based on the Bloomberg Commodity Index or another broad commodity index, including all six 'groups' of commodities. You do not have to be a rocket scientist to understand that Grains, Soft Commodities, and Livestock are not scarce. Together, these three groups make up more than one-third of the index. This leaves aside the fact that the commodity characteristics within these groups are also very different. Coffee, cotton, and sugar are very different, yet they all qualify as 'Soft Commodities.' But that's not all. Even though supply and demand imbalances can persist over long periods, Industrial Metals like copper are also not intrinsically scarce. The mandated "Green Revolution,' unrealistic as its targets may be at this point, will likely result in a long-lasting supply-demand gap, increasing the odds of higher prices. But at some price, supply will start to catch up. In addition, while it has become increasingly difficult to get (more) oil out of the ground, and the discovery of new major oil fields has been on the decline, policymakers have decided that the demand for oil must at one point reach zero. Hence, oil is not intrinsically scarce. Truly scarce commodities are found in Precious Metals, representing less than one-fifth of the Bloomberg Commodity Index. If one includes the market cap of an asset in the investment decision, an aspect commonly overlooked by many investors, gold, which represents a weight of over 15% of the index, is the only feasible scarce commodity. However, as gold is not consumed, traditional supply and demand dynamics do not apply. On top of that, gold has many other features that go beyond traditional commodities. It used to be money and can still be used as money in many places worldwide. And it is acknowledged by most investors and people as a store of value. This makes me conclude that gold must be seen as a separate asset class and not as a commodity in the traditional sense. Stay ahead of markets with the Blokland Smart Multi-Asset Newsletter:

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---US outperforming Europe--- Just 3 short months back, 60% of fund managers expected European indices to outperform American ones. But despite the ongoing narrative about European stocks gaining ground on their American counterparts, the data tells a different story. The Stoxx 600, Europe's benchmark index, has underperformed the S&P 500 by 9% this year. This marks two years of lagging performance, during a time when many portfolio managers, fund managers, and investors have been bullish on rotating from American to European markets. So what’s driving this divergence between expectations and reality? A closer look at the macro reveals some key factors at play. The US economy is showing more resilience than expected, while Europe is facing headwinds. Germany, Europe's largest economy, surprisingly contracted in Q2, while the rest of the Eurozone managed just 1.2% annual growth. In contrast, America's GDP continued to outperform analyst expectations, growing at a 3.6% annual rate. Investors are also anticipating that the US Federal Reserve will cut rates sooner and more aggressively than previously thought - a positive signal for US markets. Current pricing indicates a 70% probability of a 25 basis point cut, with a 30% chance of a 50 basis point cut! It's worth noting that European stocks are still trading at a significant discount compared to their American peers. The Stoxx 600 trades at about 14 times forward earnings, while the S&P 500 sits at 21 - but this is because S&P 500 earnings forecasts are on an upward trajectory, while Stoxx 600 estimates have remained flat since June. Interestingly, investors are becoming more nuanced in their approach to the US market. The S&P 500 equal-weighted index, which reduces the impact of tech giants, has been outperforming the Nasdaq. This suggests there's value to be found beyond just the big tech names, indicating that US market growth is driven by broader fundamentals rather than just AI hype. But what’s the takeaway for investors? Global diversification still remains important, but the US market continues to defy expectations with its strong performance. Europe's lower valuations will definitely offer opportunities to savvier investors, however, American markets are still setting the pace for the rest of the world. As always, it's wise to maintain a balanced portfolio - don't put all your eggs in one basket, or one continent for that matter. #MarketAnalysis #S&P500 #Stoxx600 #GlobalMarkets #USMarkets #EuropeMarkets #FederalReserve #GDP #indices #benchmark Nasdaq S&P Global STOXX Appreciate

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The new ECB system, although it does not involve direct asset purchases like Quantitative Easing (QE), could create a situation where reserve loans, such as LTRO and TLTRO, need to be constantly renewed. This would effectively create a liquidity mechanism similar to QE, as banks would continue relying on these credit lines from the ECB to maintain their liquidity. One of the most relevant consequences of this approach is that it could increase dependence on more global banks, which have greater access to the ECB due to their size, reach, and financial strength. This aspect concentrates liquidity access in the hands of a smaller number of large banks, potentially generating additional systemic risks by centralizing financial risk in globally interconnected institutions. At the same time, by overlooking the shadow banking sector, which plays a key role in providing liquidity in the repo market and other short-term instruments, the European financial system could become more exposed to the eurodollar system. Actors unable to access the ECB would seek alternative sources of liquidity in international markets. This would not only increase the European system’s dependence on the global financial system but could also create greater tensions in the international financial system, as the interconnections between the European financial system and the eurodollar system, already complex and vulnerable to global fluctuations, intensify. In summary, although the ECB is not directly purchasing assets like in QE, its new system could lead to renewed dependence on reserve loans, with similar implications in terms of centralizing liquidity and increasing exposure to international risks, particularly the eurodollar system.

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The ECB sees inflation swiftly back towards 2%, but it still refuses to cut rates. ECB policy mistake around the corner? President Lagarde just wrapped up her March ECB press conference with two clear messages: - The Staff Projections show that ECB members are more and more comfortable with the disinflation process: they now see 2024 headline inflation at 2.3% and even core inflation basically at the 2% target in 2025. In other words: the ECB thinks we are getting there, and relatively fast. - But the second message is that the ECB will most likely wait until June to start cutting interest rates as it wants more and more confirmation that their forecasts are materializing. Or, if Lagarde could be brutally honest: they want the Fed to start cutting rates, so that the ECB can go ahead as well. Now, what's the problem with such a ''wait-and-see'' approach? The problem is thatmonetary policy works with lags. As it took 18+ months for interest rate hikes to show into weaker household and corporate borrowing, softer economic activity and ultimately disinflation it will take a long time for interest rate cuts to work their stimulative magic as well. As a Central Bank, being proactive in setting your monetary policy is important: waiting until you have all the information can often be too late. The chart below shows today's 6-month annualized trends in European core inflation are already stable around 2% for months in a row. Yet, the ECB is keeping the deposit rate at 4% imposing a restrictive monetary policy stance last seen in 2007. It would probably be smarter to be proactive, and not reactive in setting monetary policy here. Preventing a policy mistake that could send the economy in a recession seems a better risk management approach than waiting and waiting to start the cutting cycle despite core inflation already trending at 2% for a while. The ECB shouldn't wait any longer.

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In our #CrossAssetWeekly we explain this week why we believe the #ECB can and should front load some of its interest rate cuts and lower its policy rate in October and December - a view that we are holding for many months now and not only because several speakers from the Eurotower indicated lately that they are increasingly converging towards it. Basically we argue that (1) inflation expecations are well anchored again such that the ECB doesn't have to fight for its credibility anymore and can take comfort in its own forecasts that show inflation declining towards its inflation target in a policy relevant time. (2) Currently, only services prices are elevated. These, however, will also moderate as their main driver - the labour market - is already cooling and so will wages with a certain delay. While the unemployment rate is still at a record low, vacancies are coming down and companies increasingly report that it is the lack of demand not the lack of labour that is constraining their growth. (3) Risks are moving away from too elevated inflation to too low growth. We never bought the case that the economy can fully recover on the back of higher private consumption only. True, real household income increases on the back of lower inflation and higher wages. But households will not spend it fully if the general economic environment is as bad as it is. What the euro area economy needs is more #investment spending. But that is unlikely with interest rates being that high. Higher investment spending would accelerate productivity growth or increase the housing stock both of which could lower inflation. (4) The risk of a policy mistake by lowering policy rates too early are very small as monetary policy will remain restrictive and therefore will contribute to lower inflation even after a few rate cuts. In case, inflation unexpectedly picked up the ECB would not even have to increase rates again. It could simply leave them constant for longer. (5) Instead the ECB risks making a policy #mistake by not lowering policy rates fast enough. Real rates would increase if inflation expectations are falling faster than nominal rates. Basically that implies that policy rates should be lower if inflation is at 2.5% and not at 7.5% anymore. In our Weekly we also comment on the latest policy stimulus in #China. While that can be a turning point for financial markets it is not yet for the economy. It will not stop the correction in the housing market and is therefore also not turning the economic cycle. For this to happen more stimulus is still needed. Finally, we argue that the #US corporate sector is still sufficiently healthy such that we do not expect large scale layoffs soon. Read more in the full publication: https://lnkd.in/dpBf3fJn

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"A setback has often cleared the way for greater prosperity. Many things have fallen only to rise to more exalted heights" - Seneca Digital assets are growing as an asset class, and the sentiment around it certainly seems to be improving amongst professional investors—in fact, no lesser authority than Larry Fink just declared, "We believe Bitcoin is an asset class in itself" during BlackRock's Q3 earnings call. But rather than just citing broad sentiment, it's always nice to call on some numbers. A new survey released by the AIMA - The Alternative Investment Management Association and PwC outlined the evolution of hedge fund attitudes towards digital assets, and the results showcase positive evolution. Almost half of all hedge funds surveyed carry exposure to digital assets, indicating “a steady recovery in confidence over the last year” according to James Delaney of AIMA. He cited increased regulatory clarity (and ETFs) as a key factor behind this upswing, stating “that clarity is definitely boosting confidence in the asset class”. In total, 47% of surveyed hedge funds had exposure to digital assets; up strongly from 29% in 2023 and 37% in 2022. 33% of those invested expressed an interest in fund tokenisation, with 12% of crypto-centric hedge funds already exposed, spurred by great strides in tokenisation this year, as evidenced by BlackRock's BUIDL. Of those currently invested, “67% plan to maintain the same level of capital in crypto while the rest plan to invest more by the end of 2024”. Crucially, a lot of this sentiment shift appears to be client-driven; 57% of traditional hedge funds (and a whopping 68% of hedge funds not currently invested in digital assets) said they're experiencing increasing interest in crypto assets from institutional investors. As well as greater adoption and clarity, potential returns are another source of this rising positive sentiment. Edward Chin, co-founder of Parataxis Capital, commented that “The application of traditional investment strategies can generate much higher returns in crypto given the market is less efficient… Simple market-neutral arbitrage trading strategies that generate mid to high-single digits returns in traditional asset markets can yield high 20% to low 30% type returns”. The overall sentiments in PwC's report align with a survey we at Nickel conducted in August. It found that 81% of wealth managers and institutional investors who already hold digital assets believe that DeFi investments are becoming more attractive—and a total 23% of the 200 respondents believed they're becoming much more attractive. Almost two-thirds of respondents had already increased their exposure this year, with both long- and short-term investment horizons. Although the digital asset market hasn't grown by the same scale in 2024 (thus far) as in 2023, the institutional sentiment is now far healthier, as the asset class has advanced in legitimacy and regulatory transparency. #digitalassets #evolution

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Which U.S. Stocks Generated the Highest Long-Term Returns? 👨‍🎓 This Hendrik Bessembinder look into in his recent paper. This report describes compound return outcomes for the 29,078 publicly-listed common stocks contained in the CRSP database from December 1925 to December 2023. The majority (51.6%) of these stocks had negative cumulative returns. However, the investment performance of some stocks was remarkable. Seventeen stocks delivered cumulative returns greater than five million percent (or $50,000 per dollar initially invested), with the highest cumulative return of 265 million percent (or $2.65 million per dollar initially invested) accruing to long-term investors in Altria Group. Annualized compound returns to these top performers relatively were modest, averaging 13.47% across the top seventeen stocks, thereby affirming the importance of "time in the market."

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An excellent take from The FT on NFP yearly revisions post the ZH story. This obviously caused front running sellers of USD. I made it free to the first 10 people as a FREE gift. BAML nicely added: Are these figures final? No. "This is a preliminary estimate of the annual benchmark revision. The actual revision might be different, based on revisions to the QCEW data. Last year’s preliminary estimate was -306k, but the final revision was just -266k." What does this mean for the unemployment rate? Nothing. "The unemployment rate is calculated from the household survey. The QCEW impacts the establishment survey. What are the broader labor market implications? Even after these large downward revisions, the labor market looks to have been on solid footing last year and in 1Q 2024. That is consistent with the resilience in consumer spending." By contrast, employment growth in the household survey looks too weak relative to the rest of the macro data (54k on average from April 2023 to March 2024). That said, the revisions do help close the gap between the two surveys. My 3 key considerations: 1. USD sold on the ZH story rumour and bought the "fact" but we need the doves to come out AKA Dec 2023 for EURUSD to crack 1.1276 which is the 50% fib on the DAILY CHART. 2. Forget the yearly revisions and focus on lead indicators like LMCI (Kansas City FED) which looks smelly to say the least. NAIRU getting hit on my radar too. 3. Labor Costs nose diving which should drag Core PCE lower (dare I say it below 2% Happy Friday!

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