Alpha-Centric ESG Research

Kyle Rudden

Two days ago the U.K. Financial Reporting Council announced 125 successful signatories (aka "not greenwashers") to the revised U.K. Stewardship Code. Signatories are integrating stewardship and ESG (Environmental, Social, Governance) factors into investment decisions, to high standards.Whilst this is ostensibly limited to U.K. pension assets, ramifications are more far-reaching than it might at first appear (one indication is the number of North American and Asia Pacific signatories, in addition to the expected European names). More specifically, the broad relevance is because it:<ul>
<li>Affects firms doing business with U.K. asset managers/owners not just the managers/owners.</li>
<li>Is a quasi-blueprint for similar anti-greenwashing initiatives taking root in the U.S. and Asia.</li>
<li>Greenwashing is having an increasing impact on stocks prices (e.g., DWS Group last month).</li>
</ul>This is one battle in an emerging global war on greenwashing. The U.S. SEC has its own agenda to fight greenwashing and Asia isn't far behind (e.g., regulators in Japan stepping up scrutiny). There is more to come, and a lot to learn from this including who is (and is not) on the signatory list.

Two days ago the U.K. Financial Reporting Council announced 125 successful signatories (aka "not greenwashers") to the revised U.K. Stewardship Code. Signatories are integrating stewardship and ESG (Environmental, Social, Governance) factors into investment decisions, to high standards.Whilst this is ostensibly limited to U.K. pension assets, ramifications are more far-reaching than it might at first appear (one indication is the number of North American and Asia Pacific signatories, in addition to the expected European names). More specifically, the broad relevance is because it:
Affects firms doing business with U.K. asset managers/owners not just the managers/owners.
Is a quasi-blueprint for similar anti-greenwashing initiatives taking root in the U.S. and Asia.
Greenwashing is having an increasing impact on stocks prices (e.g., DWS Group last month).
This is one battle in an emerging global war on greenwashing. The U.S. SEC has its own agenda to fight greenwashing and Asia isn't far behind (e.g., regulators in Japan stepping up scrutiny). There is more to come, and a lot to learn from this including who is (and is not) on the signatory list.

The War on Greenwashing: UK Stewardship Code "Successful Signatories" Has Broader Implications

Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Thematic (Sector/Industry)

<ul>
<li>The Republican replacement for ‘Obamacare’ has been announced and looks an incoherent mess – resurgent healthcare inflation will be a drag on discretionary spending.</li>
<li>The US yield curve is flattening, overall bank credit growth has been negative for two months and yesterday’s January consumer lending data was about half consensus expectations.</li>
<li>The global mining sector has been selling off as expected with iron ore/copper prices – I remain tactically short the FTSE 350 mining index.</li>
<li>Overall, the US…</li>
</ul>


The Republican replacement for ‘Obamacare’ has been announced and looks an incoherent mess – resurgent healthcare inflation will be a drag on discretionary spending.
The US yield curve is flattening, overall bank credit growth has been negative for two months and yesterday’s January consumer lending data was about half consensus expectations.
The global mining sector has been selling off as expected with iron ore/copper prices – I remain tactically short the FTSE 350 mining index.
Overall, the US…


US Healthcare Overhaul Stumbling, Singapore Cyclical Rally Looking Premature

Transport Sector, China and Asia-focused Research

Charles De Trenck

This topic has nagged me for some time. Two months ago when the Case-Shiller Home Price Index “made a new high” and after new highs again this week, I’ve been doing back of the envelope calculations based on my property portfolio to show how screwed tracking prices in property investments can be.I believe such coverage of property price performance is wholly misleading and misrepresents real returns for investors and home buyers.A  home and a home price  that was transacted even 10 years ago was a substantially different home to today’s home. A recognized stock price (not DRYS!)  over 10 years has a much better chance of reflecting price movements that correspond to positive and negative returns to the investor directly.The distortion in property prices comes from a slew of adjustments we need to make, and which can shave several percent off a value per year! I’ve used my own property transaction data to work out the adjustments that should be made. There are two main categories which need to be made (with many sub-categories).

This topic has nagged me for some time. Two months ago when the Case-Shiller Home Price Index “made a new high” and after new highs again this week, I’ve been doing back of the envelope calculations based on my property portfolio to show how screwed tracking prices in property investments can be.I believe such coverage of property price performance is wholly misleading and misrepresents real returns for investors and home buyers.A  home and a home price  that was transacted even 10 years ago was a substantially different home to today’s home. A recognized stock price (not DRYS!)  over 10 years has a much better chance of reflecting price movements that correspond to positive and negative returns to the investor directly.The distortion in property prices comes from a slew of adjustments we need to make, and which can shave several percent off a value per year! I’ve used my own property transaction data to work out the adjustments that should be made. There are two main categories which need to be made (with many sub-categories).

Case-Shiller Property Indices Hugely Misleading...and Different from Stocks (LT Invst Windows Tight)

<ul>
<li>The consensus expected a rampant USD this year, but this wasn’t consistent with the Trump trade agenda – the dollar has had its worst January in over a decade.</li>
<li>That has helped the US tech sector rebound strongly from the post-election selloff, as have the leading Chinese web names – secular growth is back in fashion.</li>
<li>The Q4 results from Microsoft, Intel and Alphabet indicated that cloud computing is the most significant near-term driver of tech sector revenues but AI will follow soon.</li>
<li>Alibaba is…</li>
</ul>


The consensus expected a rampant USD this year, but this wasn’t consistent with the Trump trade agenda – the dollar has had its worst January in over a decade.
That has helped the US tech sector rebound strongly from the post-election selloff, as have the leading Chinese web names – secular growth is back in fashion.
The Q4 results from Microsoft, Intel and Alphabet indicated that cloud computing is the most significant near-term driver of tech sector revenues but AI will follow soon.
Alibaba is…


Tech Rebounds as USD Reverses, Macau Recovery Continues...

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
​
More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

The new US administration is heading towards a stand-off with China over trade by eschewing the incremental approach of Obama’s administration in favour of more specific targets, to be pursued by bilateral negotiations/ultimatums in addition to the usual multilateral channels. The Trump team is targeting four distinct areas to help reduce the bilateral trade imbalance, all of which touch on what the Chinese authorities perceive as vital national interests, so it is difficult to identify any…

The new US administration is heading towards a stand-off with China over trade by eschewing the incremental approach of Obama’s administration in favour of more specific targets, to be pursued by bilateral negotiations/ultimatums in addition to the usual multilateral channels. The Trump team is targeting four distinct areas to help reduce the bilateral trade imbalance, all of which touch on what the Chinese authorities perceive as vital national interests, so it is difficult to identify any…

Trump and China; the Calm Before the Storm?

United States

Aon PLC is a professional services provider. The Company is comprised of risk and insurance brokerage consulting. Aon's services include helping manage risk for clients, negotiating and placing insurance risk with other carriers, and advising clients related to health and benefits, retirement, compensation, strategic human capital, and human resource outsourcing.

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Aon (AON US)

The War on Greenwashing: UK Stewardship Code "Successful Signatories" Has Broader Implications

Telegraph from European front in global war on greenwashing. U.K. names stewardship victors ("not greenwashers"). Many notable casualties. Anti...

Kyle Rudden

US Healthcare Overhaul Stumbling, Singapore Cyclical Rally Looking Premature

The Republican replacement for ‘Obamacare’ has been announced and looks an incoherent mess – resurgent healthcare inflation will be a drag on...

Sean Maher

Case-Shiller Property Indices Hugely Misleading...and Different from Stocks (LT Invst Windows Tight)

This topic has nagged me for some time. Two months ago when the Case-Shiller Home Price Index “made a new high” and after new highs again this...

Charles De Trenck

Tech Rebounds as USD Reverses, Macau Recovery Continues...

The consensus expected a rampant USD this year, but this wasn’t consistent with the Trump trade agenda – the dollar has had its worst January in...

Sean Maher

Trump and China; the Calm Before the Storm?

The new US administration is heading towards a stand-off with China over trade by eschewing the incremental approach of Obama’s administration in...

John-Paul Smith

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