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India’s demonetization: it’s like pixie-dust for bank balance-sheets

India’s demonetization: it’s like pixie-dust for bank balance-sheets

Many motives have been advanced for the great Indian demonetization of 2016. These include reducing the informal/untaxed “black-money” economy, removing counterfeit notes from circulation, making terrorist financing more difficult etc. Might there be another, unstated, reason apparent to central bank watchers? A subtle subterfuge to reduce the perceived level of non-performing assets (NPAs) at Indian …

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What should investors expect if Trump wins?

What should investors expect if Trump wins?

First, we think a Trump victory is quite unlikely. That said, the probability is not zero, it’s likely to be around 15-25%. We routinely analyze even less likely events and their impact on markets, so we have considered the reaction of markets if Mr. Trump were to win the general election. There will be almost no place to hide …

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If a presidential candidate berates the Fed and no one pays attention, do markets still react?

If a presidential candidate berates the Fed and no one pays attention, do markets still react?

Friends, The Federal Reserve chose not to raise rates in September, despite speculation by many participants that they would. The decision went as we expected since the Fed is generally unwilling to move rates this close to a presidential election. As an institution, the Fed is very reluctant to take actions that could be interpreted as favoring …

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United For Action SRI Presentation

United For Action SRI Presentation

Louis will be speaking about Socially Responsible Investing at the monthly United For Action meeting this Thursday, September 8th from 6:30-7:30.  United For Action is Non-Profit organization comprised of volunteers who shape public policy decisions by organizing and mobilizing groups of like-minded citizens to promote public health and sustainability.  The meeting is open to the …

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Brexit and the rise of Populist Isolationism

Brexit and the rise of Populist Isolationism

Friends, The second quarter of 2016 saw some stabilization in global equities after a very volatile Q1. But this calm was short-lived as the surprise results of the Brexit vote roiled markets in the last weeks of the quarter. We do not believe the Brexit referendum in itself will have a significant impact on the …

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2016 Q1 letter: Negative interest rates cap a rocky quarter

2016 Q1 letter: Negative interest rates cap a rocky quarter

Friends, The first quarter of 2016 saw market gyrations far rockier than many prognosticators had expected. A sharp drop in commodities prices and oil in particular sparked fears of a global slow-down and impacted all asset classes. Increased oil production in North America and the prospect of renewed imports from Iran led to expectations of a supply glut. Slowing economies in China, …

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2016 Investment Themes: An Uphill Battle

2016 Investment Themes: An Uphill Battle

Fed stays the course: We expect short term rates to rise by 1% over 2016, and believe long-term rate rises will be roughly commensurate. We believe the Fed’s board will stick with their stated intentions, it would require dramatic events to make them change course during an election year.   A return to risk: We …

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2015 Q4 letter: Enter risk center stage

2015 Q4 letter: Enter risk center stage

After almost seven long years at effectively zero interest rates, on December 16th the Federal reserve raised rates 25 basis points and signaled a handful of similar increases to come over the course of the year. This move was not unexpected, and there are numerous caveats and complications since so many unconventional tools have been …

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2015 year-end review of themes

2015 year-end review of themes

    Overall, we did well on our call for 2015. We were right on six, half right on three others and had one wrong. In general, the year lived up to our expectations of a low return environment with the anticipated Fed rate hike being the biggest influence.   ~ If not now, when? If …

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Q3 letter: China and Rates driving the market

Q3 letter: China and Rates driving the market

In our last letter, we stressed how economic turmoil in China could have far-reaching implications for the global economy.  Much of the past quarter’s market activity has been driven by this concern as global risk assets sold off in response to persistently weak data out of China. We continue to view events in China as …

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Chinese police haul in investment managers to probe “market volatility”

Chinese police haul in investment managers to probe “market volatility”

Over the course of this week, every move in global markets has been ascribed to “fear about China”. But it’s pretty clear that most of the media does not really understand what is happening in Chinese “markets” and the Chinese economy. Markets are closed in China today and tomorrow, while Hong Kong will be open …

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Dead Cat Bounce: Intra-day swing of 700 Dow points, ending down 200

Dead Cat Bounce: Intra-day swing of 700 Dow points, ending down 200

Futures this morning were up over 500 points, most of the trading during the day was above the 16,000 level between 250 and 400 points up. But we’ve closed at 15,666, the lows of the day. Though yesterday’s numbers were eye-popping, today is arguably going to create more jitters. Big intra-day swings that end on …

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The real risk is China, not Greece – 2015 Q2 Letter

The real risk is China, not Greece – 2015 Q2 Letter

Two inflection points long in the making appear to have arrived simultaneously over the past few weeks. In Europe, negotiations between Greece and Euro-zone countries that have lent to Greece appear to have broken down; and in China, the stock market has taken a remarkable tumble. In itself, the Shanghai market’s steep fall is not …

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Climate Action Panel

Climate Action Panel

Lou will be speaking on a Climate Action Panel titled “Local Climate Action in the Age of Big Fossil” sponsored by Greater NYC For Change, 350NYC, Manhattan Young Democrats and United For Action this Tuesday February 3rd starting at 6:30pm.  The event will be held at St. John’s Church meeting room located at 81 Christopher …

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2015 Investment Themes: The bells that toll

2015 Investment Themes: The bells that toll

  If not now, when? If not the Fed, who?: We expect the Federal Reserve to raise interest rates in 2015. We expect rates to gradually rise to a 1.0%–1.5% target, which would still be historically low. Short term rates after the tech wreck and 9/11 were kept below 2.0% for 3 years. For one …

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