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David Fuller and Eoin Treacy's Comment of the Day
Category - Global Middle Class

    The Big Picture

    Thanks to a subscriber for this report from Societe Generale which may be of interest. Here is a section:

    Morning Tack November 29th 2018

    Thanks to a subscriber for this report from Raymond James which may be of interest. Here is a section: 

    2019 Outlook - Late Cycle Blues

    Thanks to a subscriber for this report from Barclays focusing on European markets which may be of interest to subscribers. Here is a section:

    Emerging Markets Retake the Lead

    Thanks to a subscriber for report from Morgan Stanley which may be of interest to subscribers. Here is a section:

    Email of the day on Europe and the UK

    Glad you had a good meeting in London the week before last. Would have been there, but still recovering from breaking a femur in June.

    Two things that might interest you.

    First, from a John Mauldin letter:

    Quick anecdote from my time in Frankfurt. I spoke for fund manager Lupus Alpha to approximately 250 pension fund managers, representing most of Germany’s retirement monies. I asked for a show of hands on whether they liked being part of the European Union. Almost everyone raised their hands. I then asked if they thought participating in the euro was a good thing. Probably 80% raised their hands. When asked who doesn’t like the euro, maybe 10% of the hands went up.

    Then the money question. I asked if they would be willing to take Italy’s debt and all the debt of every eurozone member and put it on the European Central Bank balance sheet, with caveats about controlling national budgets. Fewer than 20% of the hands went up.

    I then engaged the audience further, saying, the last two questions were essentially the same. If you want to keep the euro, you’ll have to do something about the imbalances between the countries and debts. No monetary union in history has ever survived without becoming a fiscal union as well. Even reminding them that failure to do this might cause the euro to break up and bring back the Deutschmark didn’t seem to change many opinions. I reminded them that a Deutschmark would mean a serious recession/depression in Germany as it would raise the price of all German exports by at least 50%. Mercedes and BMWs are expensive enough for Germany’s customers, let alone at a 50% price hike.

    This audience should have easily accepted the argument for putting all European debt on the ECB balance sheet. Imagine if I asked the typical German voter, especially those in rural areas. That tells me Europe could have a bumpier future than I thought.

    Second, a piece from the FT (as an attachment) about whether property is still a long-term bet for retirement. Conclusion: it's not.

    Thanks for all great recent pieces. I really liked the Ray Dalio discussion.

    Have a great Christmas.

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    RBC Wealth Management 2019 Investment Stance

    Thanks to a subscriber for this report which may be of interest. Here is a section:

    The frontier market that top rival managers agree on

    This article by Sam Benstead for CityWire may be of interest to subscribers. Here is a section:

    Bannan agreed and said the current macro environment is very strong, with high rates of GDP growth, low inflation and a large trade surplus.

    ‘The government has undertaken a lot of reforms over the last decade to open up the economy and encourage investment in vital infrastructure.

    'This has allowed Vietnam to industrialise and attract huge amounts of FDI with a lot of production relocating from Northern Asia to Vietnam,’ said Bannan.

    'As the Vietnamese move from virtually subsistence existence in rural areas, where 65% of the population still live, to work at these FDI invested factories there is a monumental shift in household wealth. I have experienced these developments first hand, having spent 5 years living in Saigon.'

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