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Equity & Investment Strategy


Equity & Investment Strategy Team

David Bowers
Managing Director & Head of Research
Ian Harnett
Managing Director & Chief Investment Strategist
Charles Cara
Head of Quantitative Strategy
Richard Mylles
Political Analyst
Aaron Thompson
Research Associate

Equity & Investment Strategy Research

Equity & Investment Strategy Products: Investment Strategy Weekly, Asset Allocation Quarterly, Politics & Themes, Surveys.

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ASR Investment Strategy Weekly - Three Cuts and a Trade Deal Fuel Dreams of Recovery
7 Nov 2019
: Ian Harnett, David Bowers, Charles Cara, Aaron Thompson, Zahra Ward-Murphy

Three Cuts and a Trade Deal Fuel Dreams of Recovery

•   Monetary easing and hopes of a trade deal are fuelling a Q4 rally

•   But the economic environment remains clouded, the liquidity boost is insubstantial and market dynamics are mixed at best

•   Investors are ignoring the recession risks already evident in earnings

•   We doubt that this rally can persist.

UK Election: Trick or Treat for Investors?
31 Oct 2019
: Richard Mylles

• Two key UK political tail risks have been greatly reduced

• Risks of a ‘no deal’ Brexit or an outright Labour majority have receded

• The chances of a softer version of Brexit, or no Brexit at all, have risen

• We answer 12 frequently asked questions on UK politics

ASR Investment Strategy - 15 Charts that Help Frame our “Risk-Off” Stance
24 Oct 2019
: David Bowers, Ian Harnett, Charles Cara, Aaron Thompson

The Mood Music Improves …

• The mood music in the markets has improved in recent weeks.

• Geopolitical uncertainty has lifted. Hope has grown of a partial/interim US-China trade deal this November. The risks of a “No Deal” Brexit have receded for now.

• Most importantly, global monetary policy has been eased. Over half the world’s Central Banks have cut rates this year; the ECB and the Fed have begun to expand their balance sheets again; and the BoJ is expected to ease policy at the month-end.

• If this year’s slowdown is just the result of a series of temporary supply-chain disruptions, aggravated by US-China tariff uncertainty, then it would appear to be too early to be positioned for recession.

But We Think the Problems are More Deep-seated

• But we believe that investors and policymakers have still to get to grips with a series of monetary policy misjudgements that began in 2018. Until these are recognised, the risk of a US recession remains high.

• For us, the risks don’t go away until we see a material easing of monetary policy by the Fed … not just ‘insurance’ cuts.

• However, what is currently missing from our more bearish narrative is a full-scale corporate cash-flow crisis that morphs into an external-funding crisis. We have the ingredients (levered corporate balance sheets, margin pressure, and negative earnings growth) but lack the catalyst.

Fifteen Critical Charts that Frame our Thinking

• In this report review 15 of the charts that have framed our Risk-Off stance, and convinced us that this slowdown is more than a series of short-term supply-chain disruptions.
UK Politics - No deal risk down, long term economic risk up
18 Oct 2019
: Richard Mylles

• Short-term risk of a ‘no deal’ Brexit is likely off the table

• But new deal lays ground for a distant UK-EU economic relationship

• An extension still seems likely, possibly followed by an election

ASR Investment Strategy - Cashflow Implications of Turn in Economic Cycle
17 Oct 2019
: Charles Cara, Ian Harnett, David Bowers, Aaron Thompson

• Cashflow is Strongly Related to ISM and Economic Cycle

• Record US Cashflows fully Allocated to Capex, Dividends & Buybacks

• Little Headroom if they fall.  Already Buybacks being Cut Back

• Cash Burn stocks could be forced to Prioritise Cashflow over Growth
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