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Big historical events, especially tragedies, are committed to memory so we will not forget, yet is it really good to remember everything? Put differently, is forgetfulness useful? Would we be better off if some memories disappeared?

If I were being polite, I would not argue that we are in an age of lies by politicians, businessmen, or leaders, but what The Economist has called a “post-truth world”. Stephen Colbert described the current environment as one of different levels of “truthiness”. At best, clarity by leaders and spokespeople is in short supply. Most commentary is done for spin.

The US recession probability model based on the Treasury spread is a simple straightforward forecasting tool that can be followed in real time. If the spread term negative, watch out, economic winter is coming. Nevertheless, there are only a limited number of recessions and a limited number of signals. What is as useful is watching how the probability of a recession changes during non-recession periods. Periods of growing economic stress will see an increase in recession probability. For example, periods when the probability is more than 10% or even more than 5% will be times when equity markets will be under stress. These periods may pass without a recession, but there will be an impact on financial markets. This signal may have to be confirmed with other data since it provides early warnings, but it is valuable as a simple indicator.

2016 is a year is turning out to be special for relative value hedge funds focused on distressed and event driven strategies. These two along with special situations, equity market direction, and convertible arbitrage moved to be the August winner. The losers for the month were fundamental growth and systematic CTA’s. Both these strategies need movement in economic or firm-specific fundamentals which just did not occur for the month. Relative to the flat equity and fixed income markets, August performance for hedge funds was at best fair.

The reason for the lackluster performance of managed futures is clear from a review of trends for the major sectors. For stock indices, global bonds, and currencies, the big three asset classes, there were no clear trends for the month. Global rates, energy, and commodities also showed sideways movement albeit with a slight downward tilt. The only sectors that showed any real direction were precious and base metals that moved lower.

For many it was a hot August. Time to slowdown, go on holiday, and not worry about financial markets. Of course, there is a lot to worry about, but August performance across most asset classes showed general range-bound behavior with a continued reach for yield within the equity and fixed income asset classes. The tight range was linked to no substantive news to change expectations. After weeks of hype, the comments of Fed Chairman Yellen at the Jackson Hole conference did not serve up anything new. The data driven Fed may raise rates or not based on further confirmation of data that seems stuck in a range.

In quite a few ways, recent weeks have been anything but boring. Trying to filter out important events from random noise in markets today feels like a bit of a mugs game, but that shouldn’t stop us from trying if we think that we can add some value to our investors. We would like to pick up on a couple of areas that are gaining our attention, and we’re certainly not alone, so here goes with our version of events.

IASG Alternatives was founded in 2015 by current IASG team members Perry Jonkheer, JonPaul Jonkheer, and portfolio managers, Tyler Resch and Greg Taunt. This new company adds to the services provided by Institutional Advisory Services Group (IASG) by offering futures fund and managed account platform products designed to fit the risk tolerance, diversification, and transparency needs of our customers. Our free portfolio review process consists of an initial consultation, research and evaluation of managers that fit prospective customer’s risk return profile, portfolio design, and ultimately daily monitoring and reporting once an investment is open. Through education and proper manager selection we believe futures are an option that everyone should be knowledgeable about as a potential diversifier for their traditional investments.

Thoughts on today’s Bank of Japan action and Global Equity Markets The Bank of Japan surprised markets overnight by becoming the most recent central bank to move rates into negative territory, albeit only on new excess reserves created by additional QE, and this time with a razor thin 5-4 vote. This comes on the heels of continued weak economic data, and again (their 3rd time in a year) they postponed the deadline for achieving their 2% inflation target an additional 6 months to early 2017. The Yen weakened dramatically (~2%) overnight as the market was surprised by this seemingly aggressive action in light of recent commentary that additional easing wasn’t necessary.

For the past several months, IASG has been in the process of updating the aesthetics of our site. To do this properly, we conducted an IASG user questionnaire to get a better sense of what users liked, disliked, and wanted to see more of…For the most part, feedback was incredibly good. Users loved the functionality […]