2013 Clear Harbor Flash
Market Flash: Lame-Duck Poker - The Post-Bernanke Future of the “Bernanke Put”
August 14, 2013
Long, long ago—that is to say, back in the spring—investors could safely assume a “steady as she goes” approach to U.S. monetary policy. Federal Reserve Chairman Ben Bernanke was happily presiding over his unprecedented scheme of expansionary actions; if he were to decide against another term for himself beginning in 2014, his lieutenant Janet Yellen could be expected to take his seat and play an equally dovish hand.
From a political perspective, muted inflation and employment growth seemed to justify the Fed’s course, particularly in the absence of fiscal stimulus from Congress. Financial markets continued their climb. The game continued.
Market Flash: Notes From Japan Week
June 19, 2013
I write from Tokyo, where for the past week I have been meeting with bankers, economists, bond traders, and expatriates. I have spoken with observers and analysts of Japan’s auto, bank, insurance and real estate industries, as well as people with ears to the ground regarding the country’s important technology sector.
As always, such discussions are critical elements in Clear Harbor’s bottom-up investment process. But ultimately, movement in Japan’s currency, bond yields, and equities also influence asset prices and inflation expectations far beyond the borders of this island nation.
Market Flash: A Generational Turnaround in Japan?
May 23, 2013
While the march of the Dow higher has been impressive, the most noteworthy market breakout of recent quarters has undoubtedly been that of Japan. Since September of 2012, the yen has depreciated 31% versus the U.S. dollar while the Nikkei has risen 64%, outpacing the S&P 500 by 40%.
These moves are not a random burst of regional outperformance: they reflect nothing less than the widespread perception of suddenly renewed promise for a major economy after one “lost decade” after another amid policy failure. Specifically, they are the result of an aggressive campaign of quantitative easing and monetary weakening by the Bank of Japan at the urging of Prime Minister Shinzo Abe.
Market Flash: Rally in Sovereigns Signals More of the Same from the Fed
April 30, 2013
The Clear Harbor team spent some time at yesterday’s weekly macro meeting discussing the somewhat dramatic rally in longer-dated U.S. Treasury yields since mid-March. Ten-year Treasury yields have fallen from approximately 2.05% to today’s level of 1.67%. Sovereign debt yields have also fallen in the Eurozone periphery, with 10-year yields in Italy, Spain, and Portugal declining by 75bp, 63bp, and 21bp respectively. From Sweden to New Zealand, other sovereign yields have fallen significantly as well.
Market Flash: The Consequences of a Weaker Yen
February 1, 2013
In the Clear Harbor Outlook for 2013, I outlined our view that the Japanese yen would weaken versus the U.S. dollar in 2013, providing investors with an opportunity to invest in Japanese equities that benefit from an acceleration in exports. Just this month, the yen declined in value by 6.7% percent, and the Nikkei closed the month the top performer relative to all major national indices.
We are pleased with this result from an investment perspective, as our firm's team strategies were positioned for this trend. However, we also believe that a continuation of this trend will provide challenges to investors and policy makers in the U.S. and around the world. What is the basis for this view?