What's On Tap....

Is it time for Global Equities?

As we approach the end of 2015 a shift in U.S. monetary policy seems inevitable. Recent statements from fed officials appear to be increasingly pointing towards a rate hike at the upcoming December meeting. GDP growth came in at 2.1% for the third quarter and unemployment, one of the key metrics per the fed, improved to 5.0% to reach its lowest levels since before the Great Recession. While all of this would seem like good news for the economy as a whole, it may be the case that nearly all the good news has already been baked into domestic asset prices. The S&P 500 continues to be one of the strongest performing global asset classes in the face of a complete collapse in commodities and international equities.

The shift in U.S. monetary policy, supposing we get a rate hike in December, will mark one of the few times in history that there has been a diverging monetary policy relative to the rest of the world. Given the massive run up in asset prices here, we ponder if now is the time to turn our attention to the rest of the world. Valuations for international equities have become increasingly attractive, particularly in the Emerging Market space where we have dipped below 2008 levels relative to U.S. based assets:

*Note: Valuation data is for the iShares EFA / EEM / IVV ETF

*Note: Valuation data is for the iShares EFA / EEM / IVV ETF

Developments this morning out of the ECB indicate that conditions may be improving throughout the Eurozone. The ECB did not expand its asset purchase program as many may have expected, while cutting the deposit rate by 10bps – less than the widely expected 20bps. This news appears to be the source of a huge rally in the Euro which is trading up almost 3% this afternoon. A turn higher in the Euro would make Eurozone assets significantly more attractive to foreign investors, who can reap the benefits of potentially rising asset prices and a rising currency:

As we near a potential bottom within this space, we look to strategies that present an opportunity to capitalize on these trends. Braver Capital’s Global Tactical Balanced Strategy evaluates 60+ asset classes, including 34 individual countries. We have seen the strategy key in on bullish trends in Belgium and Ireland, and a shift generally to international assets over the last several months. So, is it time for Global Equities?  We shall see...


William Royer,   Assistant Vice-President, Portfolio Manager

William Royer, Assistant Vice-President, Portfolio Manager











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