Could it be that these wild market moves are finally moving the needle on the value investors?
Vince Farrell and Matt McCoy, along with Brian McVicar, co-heads of macro research at JP Morgan Asset Management, share with us all the basics of what has transformed our pension system. The forecast is that real (adjusted for inflation) pension deficits will reduce by approximately $1 trillion by the end of 2020, with US$800 billion of that reduction occurring in 2020 alone.
Before we delve into the crystal ball of the value investment universe, the discussion returns to the thought that these wild market moves could finally be “moving the needle” on the value investors. This requires, you’ll remember, buying low and selling high. And if the market picks up steam in the second half of this year, the value investor will be in the sweet spot.
Anxiety over US-China trade relations has proved to be the market’s punch line.
So what does the future hold? McVicar shares his insight with us. First, in terms of our traditional but polarised US-China trade relationship, it is imperative for the European Central Bank to maintain monetary accommodation given current low inflation conditions in the euro area.
Secondly, India should continue to enjoy a more elevated growth profile than many of its emerging market peers given ongoing structural reforms and infrastructure development. In the US, higher savings rates are likely to deliver a tighter labour market and inflationary pressures; a clear sign of progress toward full employment.
McVicar additionally highlights how the conundrum of energy supply/demand in the US is still evolving; highlighting that the revenue margins and free cash flow generation for energy companies will be stronger in the second half of 2019 than in the first.
Overall, we are optimistic about 2019. And a return to the value investing model is not far behind.