I am concerned about tariffs. They are strong effects on importers and exporters in industries affected by tariffs and we don’t really know how tariffs will impact the supply chain and logistics for many companies. Nevertheless, the strong dollar will have a bigger impact on US exporters across the board.
A strong dollar has global financial disruptions through the change in capital flows hat come with these gains. Last year saw a dollar sell-off and we in a longer-term range, but since the start of the Fed’s end to QE and the raising rates, the direction in the dollar has been up. Look at some quick reasons for dollar gains:
Stronger asset prices.
Higher relative rates.
Tightening of money relative to EMU and Japan
Higher economic growth and deficits.
Structural reasons for return of capital to US.
Dollar hedging.
The dollar is signaling what is happening around global markets. It may have been awhile, but more investors should get into the habit of following currencies.
After hundreds of discussions with hedge fund managers, I am still surprised that there is a fear of revealing investment processes under the assumption that someone will steal their ideas and intellectual capital. There are few investment styles that are truly unique and special. What is special is still strategy execution – the practical process of delivering returns. Skill is with the decision-making execution of information and strategy.
All hedge funds are not created equal as the return box chart shows for the post Financial Crisis period. There is a significant amount of dispersion across hedge fund styles. Over the period 2009-2018, the difference between the best and worst hedge fund category is almost 7 percent after we account for global equities and bonds.
The attraction to private equity and other less liquid alternatives is clear from the Guide to Alternatives by JP Morgan Asset Management. The return profile is much higher for private equity and debt funds than more liquid alternatives and global bonds; however, the dispersion in returns is multiples higher than what can be expected from other public categories.
