• Viewpoints & Themes

     

    Strategy // Macro Trends

Underlying Macro Trends

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Consolidation

  • Bigger companies, due to access to capital and ability to compete globally, will get larger and have more pricing power (for example, telecom, airlines).
  • We think the trend toward consolidation will continue.
  • Policies & regulations are favoring big business over small business which we see as a long-term super cycle.
  • Oligopolies are being created
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The Dollar Reserve is in Question

  • The dollar as a reserve currency is at risk in the long-term. We feel dollar will gain strength in the short-term, but longer-term, a basket of currencies may be considered
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Water & Farmland

  • Water is diminishing globally due to climate change, misuse and abuse. This makes this sector look especially attractive
  • Eroding topsoil, pesticide/herbicide laden practices and other mismanagement, makes prime well-managed farmland attractive
  • Habits among consumers will continue to demand organics and cleaner food sources. Pay attention however as new bills will continue to water down organic standards.

Economic Engine is Shifting to Emerging Economies

  • Wages are rising & jobs are being created at a faster pace than Developed Economies (DE)
  • EE’s are in wealth creation cycle while DE’s are in wealth destruction (example, middle class is growing in EE’s, middle class is shrinking in U.S.)
  • Standard of living in U.S. is declining (more money will focus on necessities rather than discretionary items)
  • S. is mature, infrastructure is aged while EE’s are leap-frogging our technologies
  • New investment from multinationals and private equity, is being made in EE’s at a higher percentage than developed economies
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The Consumer is Changing

  • Spending patterns of Millennials are reminiscent of the Great Depression generation and their priorities are different from generations before.
  • Baby Boomers spending has peaked.
  • Salaries are stagnant, jobs are still scarce.
  • Retail has hit its peak, online trumps box stores
  • Shrinking of the middle class, more focused on necessities
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Changing Credit Cycle

  • Debt levels to GDP has soared since 2008 crisis, especially in the public sector
  • Bad practices are coming back, consumers are back into a leveraged position.
  • We see credit tightening and favoring larger players.
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"Inverse" Stagflation

  • The cost of necessities will rise in a high unemployment environment. More discretionary funds will be spent on food, energy, clothing and shelter.
  • This will impact the standard of living for the middle class as fees and taxes are increasing.
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Wild Cards

  • Uncertain geopolitical instability continues to pose a looming threat
  • Contagion of turmoil from current global policy will continue
  • In June 2016, money market funds will float except prime (Treasury) money markets. We are concerned how that will play out.
Long-term Portfolio Themes

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Natural Resources

  • Water
  • Farming and Farmland
  • Alternative Energy
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Global Growers, Pricing Power & Necessities

  • Infrastructure
  • Consumer Products & Services
  • Telecommunications
  • Technology
  • Food
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Emerging Economies

  • Currencies
  • Short-term Debt