Germany’s Oktoberfest is famous the world over for its traditional costumes and, most of all, its one-litre “Maß” mugs of beer. But have you thought about what beer can teach you about the world of finance and economics?
Hans-Jörg Naumer, Head of Global Capital Market Analysis and Thematic Research at Allianz Global Investors and his team prepared an infographic that compares the number of Okoberfest Maß that EUR 10 buys versus what that same money will have become if invested in German equities back in 1960. The result, Pint-sized economics!
“As our research shows, the equivalent of EUR 10 in 1960 would have been more than enough to buy an entire round for you and nine friends. But thanks to inflation, the price of a Maß has gone from 95 cents in 1960 to EUR 10.50 today – not even enough for one drink. Yet if you had skipped your drinks in 1960 and invested EUR 10 in German equities, you would now have EUR 395. That would buy you an inflation-busting 37 Maß at Oktoberfest. Prost!” Concludes Naumer.
Foto: enki22
. Las firmas de real estate tienen perspectivas positivas, a pesar de la caída del volumen de ventas
The vast majority of real estate firms have an optimistic outlook for the future of the industry’s profitability and growth, according to the National Association of Realtors´ (NAR)2016 Profile of Real Estate Firms. Profitability expectations have declined from the 2015 survey, mainly due to inventory shortages and home-price growth, but real estate firms remain confident about their overall future profitability.
“For a second year in a row, a majority of real estate firms have a positive outlook on profitability, with 91 percent of all firms expecting their net income to increase or remain the same over the next year,” said NAR President Tom Salomone, broker-owner of Real Estate II, Inc. in Coral Springs, Florida. “Although there is an overwhelmingly positive outlook, low inventory and high prices have led to an overall decrease in real estate firm’s sales volume since last year’s report. High home prices are holding back first-time buyers and low inventory means fewer sales at a time of increased Realtor membership”.
In 2016, 64 percent of firms expect profitability (net income) from all real estate activities to increase in the next year, down from 68 percent in 2015. Sixty-seven percent of commercial real estate firms expect profitability to improve (down from 75 percent in 2015), as well as 70 percent of large firms with four or more offices expect profitability to improve (down from 79 percent in the previous year). Residential firms are a little less optimistic as 65 percent expect to see an increase in their net income.
Forty-three percent of real estate firms expect competition to increase in the next year from non-traditional firms, down from 45 percent in 2015. Forty-six percent of firms see competition from virtual firms increasing (up from 41 percent in 2015), while only 17 percent expect competition increasing from traditional brick-and-mortar firms.
The sense of competition has fueled more recruitment since the 2015 survey. Forty-seven percent of firms reported they are actively recruiting sales agents in 2016, up from 44 percent in 2015. This is more common with residential firms (51 percent) than commercial firms (32 percent) and more common among offices with four offices or more (88 percent) than firms with one office (39 percent).
When asked what they see as the biggest challenges in the next two years, firms cited profitability (49 percent), keeping up with technology (48 percent), maintaining sufficient inventory (48 percent) and recruiting younger agents (36 percent).
The NAR 2016 Profile of Real Estate Firms was based on an online survey sent in July 2016 to a national sample of 147,835 executives at real estate firms.
The debate points to a lurking problem for the markets
The level of discourse was so disappointing in last week’s U.S. presidential debate that it was tempting to move up the dial and watch pro football, where the combatants at least get to wear helmets. Personal attacks, rancorous exchanges, smirks and eye rolling…they epitomized why many voters have despaired over the choice they face.
What all this focus on personality obscures, of course, is the actual issues the country faces and the philosophical differences that could seriously impact how to solve them—whether low growth, suffocating regulation, federal debt, health care, income inequality or national security, to name a few.
Not all the issues have concrete implications for investors at this stage. In recent weeks, my CIO colleagues and I have taken turns considering potential drivers for the economy and markets. Erik Knutzen, CIO for Multi-Asset Class, talked about a global focus in U.S. earnings and whether weakness could contribute to new volatility in a market that is “priced to perfection”; Fixed Income CIO Brad Tank considered the potential impacts of Japan’s steps toward “helicopter money”; and I explored whether the two major U.S. political parties could work to improve the country’s dilapidated infrastructure.
Rating the Election’s Impact
As far as the election is concerned, it’s hard to tell what the impact will be. Over the last eight presidential election cycles, inauguration years have seen exceptionally strong returns for the S&P 500, with an average gain of nearly 20% and in several cases returns of over 30%. Only in 2001, in the wake of the tech bubble, did the year turn out to be negative. In part, this positive trend may be a function of stimulus leading up to elections, or reduced policy uncertainty, or simply a touch of optimism tied to the fresh start of a four-year term. It may be a simplistic idea, but elections ultimately have tended to be a catalyst for stocks.
Could this time be different? A key concern is negative voter perception of both Hillary Clinton and Donald Trump, who have the highest unfavorable ratings of any presidential candidates in modern history.1 Regardless of who gets elected, residual anger on the part of the losing party could intensify already entrenched gridlock.
This ties into prospects for fiscal stimulus, ideally in the form of new infrastructure spending, or a deal to repatriate corporations’ overseas earnings. We remain skeptical on that front, and we believe that politicians could keep relying on easy money from the Federal Reserve to bail them out along with the economy. With minimal action in Washington, it seems likely that GDP could continue stumbling along at a 1%-2% pace in the coming year.
Softening Angle on Equities
Such meager growth of course provides little fuel for the stock market. Our Asset Allocation Committee recently downgraded its 12-month outlook for U.S. equities to “slightly underweight,” given rich valuations, a modestly higher rate forecast and potential volatility tied to earnings stagnation.
It would be tempting to minimize the potential impact of the presidential race, to “change the channel” and focus strictly on fundamentals that undoubtedly can sway the markets. But there’s a point where electoral combat and likely gridlock weigh on earnings prospects and growth trends. My “Hail Mary pass” would be that this contest will shake things up enough that politicians will work together, at least for a while, to deal with entrenched problems.
Hermes Investment Management has recently published its second and final paper from its annual Responsible Capitalism survey.
The annual survey of over 100 leading UK and European institutional investors found that the number of those who believe that the gender diversity of the senior management of an investee company is vitally important or important had more than doubled in 12 months. In 2015, only a quarter of investors placed importance on gender diversity, whereas in 2016, a total of 51% of investors agreed.
Harriet Steel, Head of Business Development, Hermes Investment Management, said: “To see the number on investors who place importance of gender diversity leap up by more than double is extremely encouraging and reflective of the high profile campaigns and initiatives introduced to increase gender parity. In our research we believe that the issue for investors appears to be risk, rather than high returns. Investors are growing increasingly aware of the link between ‘group think’ and poor corporate practice. Boards with more diverse composition tend to challenge senior management, be more innovative and make better decisions. These are febrile times and investors increasingly recognise that certain sorts of risk can fundamentally undermine the performance of their portfolios over time. Worse still, they may be accused of failing in their fiduciary duty.”
The Responsible Capitalism survey also showed that despite the gains made in gender, other characteristics of diversity lag behind in investors’ importance; such as race (30%), socio-economic (19%) and educational background (30%). As stated in the ‘Commonsense Principles of Corporate Governance’, recently endorsed by Warren Buffet and others: “Directors should have complementary and diverse skill sets, backgrounds and experiences. Diversity along multiple dimensions is critical to a high-functioning board. Director candidates should be drawn from a rigorously diverse pool.”
Steel continued: “In the Responsible Capitalism survey it was particularly encouraging to see that only a tiny proportion of investors now consider diversity of board experience (2.1%) and a Chairman independent of CEO (1%) to be ‘not important at all’. Given ongoing shareholder concerns over shared CEO/Chair roles at companies such as JP Morgan, corporate diversity is no longer being considered a ‘nice to have’, but a necessary part of responsible governance.
“Significant political and economic upheaval has prompted governments to look in increasingly greater depth at corporate governance practice. New UK Prime Minister Theresa May immediately took aim at non-executive board members ‘drawn from the same narrow social and professional circles as the executive team’, accusing them of providing insufficient scrutiny. Nineteen nations in the European Union now mandate that employee representatives sit on corporate boards, while US presidential candidate Hillary Clinton has promised corporate governance reform. When diversity considerations draw the attention of policymakers, companies and investors must increasingly take note.”
To download the Responsible Capitalism paper, click here
Kareen Peetz - Foto BNY Mellon. La primera mujer en presidir BNY Mellon, Kareen Peetz, anuncia su retiro
BNY Mellon announced that Karen B. Peetz, president, has decided to retire from the company at year end.
Peetz, BNY Mellon’s first female president, joined the company in 1998 and has played a pivotal role through periods of significant change in the organization, including the successful navigation of post-financial crisis challenges and the adoption of a more strategic, market- and solutions-led approach to client relationship management.
Peetz has been consistently recognized for her contributions to the financial services industry and has been named #1 on American Banker’s “25 Most Powerful Women in Banking” ranking in recognition of her management style, crisis management skills, influence and charitable endeavors.
“Karen’s leadership, industry expertise and partnership will be missed by BNY Mellon, and we are extremely thankful for her many contributions during her tenure,” said Gerald Hassell, Chairman and CEO of BNY Mellon.
Peetz oversees the company’s global client management and regional management, its treasury services business and its regulatory oversight functions. Prior to her appointment as president in January 2013, she led BNY Mellon’s former Financial Markets and Treasury Services group, comprised of the alternative investment services, broker-dealer and advisor services, corporate trust, depositary receipts and treasury services businesses.
There is an emerging trend among distributors of pairing multi-asset strategies, for regular income, with liquid alternatives to achieve additional returns.
For instance, banks are advising liquid alternatives to retail investors, which was once targeted at high-net-worth individuals (HNWIs) by certain banks. At a small-to-mid-sized Asian private bank, the advised allocation to liquid alternatives was 20%, while another global/regional bank’s recommendation was 40% for mass affluent clients.
Wealth managers are upbeat on liquid alternative products that are based on long-short or global macro strategies as they believe these strategies can provide investors returns that are uncorrelated to traditional asset classes. Structured products with option strategies as an income-generating idea are also often advised by wealth managers to investors with higher risk appetites.
However, according to a survey conducted for The Cerulli Report – Wealth Management in Asia 2016, retail investors in Asia may not be ready for liquid alternatives just yet.
The survey reveals that the appetite for such products remains low, as investment preference lies in cash and deposits, even as investors wish for 3% to 5% higher returns than their respective country’s one-year deposit rates and cite portfolio diversification as their top priority.
While Asian investors seem to adopt a cautious approach to their investments, Cerulli notes that a lot of convincing needs to be done by asset managers and distributors.
The Alternative Investment Management Association (AIMA), the global representative for alternative asset managers, has announced a new Chairman and the formation of a new AIMA Council, the Association’s global board of directors.
Taking over as AIMA Chair is Simon Lorne, Vice Chairman and Chief Legal Officer, Millennium Management LLC. He replaces the former SEC Commissioner Kathleen Casey, who served as Chair of AIMA from September 2012 to September 2016.
There are four new additions to the AIMA Council – Robyn Grew, Chief Administrative Officer and GC, Man Group Plc; Han Ming Ho, Partner, Sidley Austin; Ryan Taylor, Partner and Global Head of Compliance, Brevan Howard Asset Management LLP; and Michael Weinberg, Senior Managing Director, Chief Investment Strategist, Protégé Partners.
The Council, who will serve from September 2016 to September 2018, is as follows:
Simon Lorne, Millennium Management LLC (Chair)
Jack Inglis, AIMA
Olwyn Alexander, PwC
Andrew Bastow, AQR Capital Managements (Europe) LLP
Fiona Carpenter, EY
Stuart Fiertz, Cheyne Capital Management (UK) LLP
Robyn Grew, Man Group Plc
Han Ming Ho, Sidley Austin
Tim O’Brien, Pine River Capital Management LP
Martin Pabari, CQS (UK) LLP
Christopher Pearce, Marshall Wace Asia Ltd
Henry Smith, Maples and Calder
Ryan Taylor, Brevan Howard Asset Management LLP
Philip Tye, HFL Advisors Limited
Karl Wachter, Magnetar Capital LLC
Michael Weinberg, Chief Investment Strategist, Protégé Partners
As well as Casey, Eva Sanchez of Citadel Europe and Choo San Yeoh of Albourne Partners are also stepping down from the Council.
AIMA Chairman Simon Lorne said: “I’m honored to be named as AIMA’s Chair at this important time in our industry’s evolution. I look forward to working with the outstanding firms and individuals who are the global face of our industry as we work together to best serve the interests of our individual and institutional investors around the world.”
AIMA CEO Jack Inglis said: “I am excited to have such a strong board to guide our work at AIMA, and I am very much looking forward to working closely with Simon Lorne, our new Chair, as we address the big issues facing alternative investment fund managers around the world. We are fortunate to welcome to the Council individuals with the skills and experience of Robyn Grew of Man, Ryan Taylor of Brevan Howard, Michael Weinberg of Protégé Partners and Han Ming Ho of Sidley Austin. On behalf of AIMA and all the membership, I also would like to pay tribute to our out-going Chair Kathleen Casey, who served the Association with such distinction these last four years, and Eva Sanchez and Choo San Yeoh, who have made such an important contribution to AIMA and the global industry over a number of years.”
CC-BY-SA-2.0, FlickrHelmer Arizmendy, foto cedida. Lombard International abre oficina en Miami
Lombard International, a global leader in wealth structuring solutions for the high net worth market, recently announced the opening of its office in Miami, FL, located at 801 Brickell Avenue. The new office will be a hub for Lombard International’s sales team to reach high net worth individuals, families and institutions in Latin America.
“The Miami office serves as a gateway for us to engage with and educate advisors of the Latin American high net worth community,” said Helmer Arizmendy, Senior Managing Director and Latin America Region Head for Lombard International. “With this new expansion, we look forward to raising awareness of our solutions available to help protect and preserve wealth.”
This office opening comes shortly after Lombard International’s expansion into Bermuda with the appointment of Phil Trussell as Senior Managing Director to lead the growth of its life insurance operations in the region. In addition, earlier this year Lombard International opened a representative office in Paris and two brokerage offices in Asia, expanding the firm’s global footprint into other key financial markets.
“As the number of ultra-high net worth individuals and families continues to grow, Latin America is a key market for Lombard International,” said Ken Kilbane, Executive Vice President and Head of Global Distribution at Lombard International. “The opening of this new office further cements our position as a global leader in wealth structuring solutions for the high net worth market.”
Yesterday night Hillary Clinton and Donald Trump faced each other in their first Presidential Debate at Hofstra University in Hempstead, New York. The apparent winner was Hillary Clinton. While she calmly and eloquently touched many policy areas in detail, Trump’s lack of preparation had him ranting in a sloppy pattern of interruption after the first half hour, and the markets noticed. For example the Mexican peso – dollar parity went from 19.89 pesos per dollar at the beginning of the debate, to 19.54 towards the end.
Amongst the more memorable quotes are:
From Hillary:
“I think Donald just criticized me for preparing for this debate. And, yes, I did. You know what else I prepared for? I prepared to be president. And I think that’s a good thing.”
“Well, Donald, I know you live in your own reality,” Clinton responding to Trump’s trade attack.
From Donald:
That makes me smart,” Trump said in response to Clinton saying he might not pay federal income taxes.
“I was going to say something extremely rough to Hillary, to her family, and I said to myself, ‘I can’t do it. I just can’t do it.’ It’s inappropriate. It’s not nice,’ ” Trump told CNN after the debate.
During the debate they engaged in an occasionally raw series of clashes on topics from trade policy to the Iran deal to Trump’s taxes. It is clear the presidential candidates don’t often see eye to eye, but they both agree that the US needs to fix its crumbling infrastructure. Allianz Global Investors created an infographic that shows how infrastructure spending could pay off for the economy – and how investors could take advantage.
According to Kristina Hooper, US Investment Strategist at Allianz Global Investors “The US presidential election has the potential to negatively affect markets in the short term. Depending on the outcome of the Congressional races, the new president may not be able to see much of his or her platform come to fruition. However, both candidates are likely to increase fiscal spending, which should be positive for the US economy – particularly since it’s unclear how effective monetary policy still is. Investors may want to take a ‘wait-and-see‘ approach to making sector bets – except for infrastructure, which is likely to benefit regardless of who wins in November. Either way, investors should also expect greater volatility as we get closer to the election.”
Foto: Roman Boed
. El Foro FOX Otoño 2016 se centrará en “reforzar la colaboración"
Family Office Exchange (FOX), a global membership organization of enterprise families and their key advisors, has unveiled the agenda for its 2016 FOX Fall Forum, which is taking place November 2-4 in Chicago.
This year’s Fall Forum, titled “Strengthening the Partnership”, will highlight issues affecting relationships between family leaders, office executives, and trusted advisors—and offer techniques for building stronger ones.
Highlights of the program include:
Mellody Hobson, President of Ariel Investments and Board Chair for DreamWorks Animation SKG, Inc., who will join FOX founder and CEO Sara Hamilton in a fireside chat to discuss her patient investment philosophy and the many ways families can collaborate to make the world a better place in the coming decades
Michael Hayden, Retired U.S. Air Force General, Principal with The Chertoff Group and former Director of both the National Security Agency and Central Intelligence Agency, who will explore today’s dynamic geopolitical events and risks with a special focus on worldwide intelligence and cybersecurity
Julia Balandina Jacquier, Founder and Managing Director of JBJ Consult, who will speak about why and how leading families of wealth use impact investing including insights from her new study “Catalyzing Wealth For Change, A Guide to Impact Investing”
Mark Hatch, Author of “The Maker Movement Manifesto”, who will share how advanced manufacturing, crowdfunding, the collaborative economy and online markets are paving the way for individuals to create, innovate, and generate wealth for themselves and their investors.
“FOX Fall Forum is the family wealth industry’s marquee event, with ideas and networking you won’t find anywhere else,” said FOX president Alexandre Monnier. “We are especially excited about this year’s agenda, which features world-class speakers who will cover an array of topics important to our members. If you are a family leader, family office executive, or trusted advisor, you truly won’t want to miss this Forum.”
The Fall Forum agenda features sessions addressing partnerships both inside and outside the family. It will also explore topics such as investing in the post-election environment, designing an owner education curriculum that informs and solidifies partnerships, understanding and addressing the wealth gap, and appreciating the role of family storytelling to support family continuity and vision.
And like at all FOX Forums, attendees will have the opportunity to expand their networks with other enterprise owners and highly-experienced executives at several engaging social events.
