MRP’s mission is to identify actionable investment themes. Here’s a look at some of our active themes right now. For the full theme reports, click HERE.
Extended Bull in Stocks: The rally in equities that began in 2009 has had a recent correction but the major indexes will see new highs at least over the next year, supported by ample liquidity and stronger economic growth that earnings estimates have yet to reflect.
Bear Market in Bonds: Globally, long-term interest rates have begun to rise generally. Many central banks continue to support bond prices through their purchase programs, which will slow â€“ Âbut not stop â€“ the rise in yields. And then there is the tricky inflation issue central banks will have to recon with.
Abe Trade: The recent correction in global equity markets hit the Nikkei hard, but it has rebounded and we expect the Abe Trade to persist. We look for the elections to the upper house in July as an important inflection point leading to another surge.
US Housing: Typically an early cycle source of growth, US housing is coming late and is now spreading into other sectors of the economy. We expect to see continued strength in financials (mortgages servicing, loan origination), paper and forest products (lumber), and consumer durables (white appliances, carpeting, etc).
France - Under Pressure: France just got downgraded by Fitch. And while France is not quite standing cap in hand in need of a formal bail out, our outlook is the same as in April: Bad economy, worse polity, ugly outlook.
Energy Infrastructure: Booming energy production in North America has helped keep a lid on West Texas oil prices and, since 2011, created a differential with global oil prices. This trend has a long way to go, giving North America’s energy users a competitive edge in industries from plastics to chemicals.
Media: Content providers of shows and other media continue to benefit from booming demand relative to their peers.
Asset Managers & Investment Banks: In the US, both groups are benefiting from rising markets, increased fund flows, more M&A, a pipeline of IPOs, and write-up of mortgages and other housing-related securities. European financials continue to face headwinds.
You can find the full reports HERE.
Warren Hatch, PhD, CFA
Portfolio Manager and Global Strategist
McAlinden Research Partners