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Equity Strategy Team

Charles Cara
Head of Quantitative Strategy
Philip Isherwood
Global Sector Strategist
Richard Mylles
Political Analyst
Zahra Ward-Murphy
Global Equity Strategist

Equity Strategy Research

Equity Strategy Products: Absolute Strategy Weekly, Equity Strategy Quarterly, Trade Alerts.

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ASR Investment Weekly - 25th May 2017
25 May 2017
: Zahra Ward-Murphy, Philip Isherwood, Charles Cara, Raphael Olszyna-Marzys, Dominic White, Michael Hessel, Ben Blanchard, David McBain, Chris Turner, Stefano Di Domizio, Richard Mylles


Please see below for full contents

Equity Strategy: 
Time to Take Profits in Asia-ex-Japan Equities
Following 10% outperformance since December, and with our SBI overbought, we now downgrade our recommendation on Asia-ex-Japan from Overweight to Neutral. Recent outperformance has been supported by Activity Surprises, the region’s high Beta with respect to Global Equities, the weaker USD and lower bond yields. Our belief that surprises have peaked and global growth will slow as the year progresses therefore present a challenge to further outperformance, whilst tapering may put a floor under global bond yields. However, the increased weight of the Tech in Asian Equities may act to limit the region’s downside in a global slowdown scenario.
 PODCAST: Click to hear Zahra’s accompanying podcast

Economics: US - A Bold Path Forward
In his final article for ASR, former Treasury official, Gerald Cohen, argues that a credible proposal is needed to overcome the current political morass. One avenue might be to introduce a ’20-20-20 tax plan’, suggested by Gerald himself. Without such a plan, the Trump administration risks losing the confidence of consumers and businesses, which could undermine the financial markets and economy.

Multi-Asset: Taking profits on long EM / short Materials
We are recommending clients take profits on the long MSCI Emerging Markets / short MSCI World Materials ‘convergence trade’ idea from February as: a) the performance ‘gap’ that opened up in the aftermath of Trump’s election victory has largely closed; and b) Brazil’s political scandal has brought forward Brazilian sovereign credit concerns that would probably have otherwise emerged in H2 as the growth rebound faltered.

Politics: The Four Options for Brexit
We envisage four potential Brexit outcomes, none of which include a trade deal being negotiated within two years as outlined by the UK Government.
1.    A negotiated hard Brexit                  ASR probability 40%
2.    An unnegotiated chaotic Brexit         ASR probability 40%
3.    A transitional Brexit                        ASR probability 15%
4.    No Brexit                                       ASR probability 5%

Time to Take Profits in Asia-ex-Japan Equities, by Zahra

• Guest article: A Bold Path Forward, by Gerald D. Cohen

• Absolute Surprise: The costs of a hard Brexit, by Raph

• Absolute News: Proposals for eurozone renewal

Key Views & Forecasts

Closing long Emerging Markets / short Materials trade, by Chris

Sentiment extremes and markets on the move, by David

Multi-Asset open trade recommendations

The Four Options for Brexit, by Richard

Watch: ASR Investment Weekly - 25th May 2017
ASR Investment Weekly - US Corporate Debt and Global Liquidity Risks in Focus
18 May 2017
: Raphael Olszyna-Marzys, Michael Hessel, Ben Blanchard, Ian Harnett, Charles Cara, Philip Isherwood, Zahra Ward-Murphy, David McBain, Stefano Di Domizio, Chris Turner, Dominic White
Watch: ASR Investment Weekly - US Corporate Debt and Global Liquidity Risks in Focus
May edition of ASR's CIO Pack
12 May 2017
: Charles Cara

ASR’s CIO Pack summarises the macro and the market environment and highlights 10 charts from the ASR research team for the month.  For May these include:

•       Global Equities unlikely to sustain gains
•       It’s not just lower oil prices that will challenge global EPS
•       Risk of Higher Real Yields may be Overstated
•       EUR/USD and Eurozone- US real 5-year swap rate spread
•       ASR Newsflow: Fiscal boost offset by Monetary Tightening
•       IG Corporate Bonds at risk from skewed debt and duration
•       Increasing share of US dividends paid by high debt stocks
•       When will the Riksbank accept that policy is too loose?
•       Sticking with 7/10yr yield curve steepener
•       US Tax reform needs to deal with ‘pass through’ companies

Investment Strategy Weekly Update - 11th May 2017
11 May 2017
: Raphael Olszyna-Marzys, Michael Hessel, Dominic White, Ben Blanchard, Philip Isherwood, Ian Harnett, Zahra Ward-Murphy, David McBain, Chris Turner, Stefano Di Domizio
Watch: Investment Strategy Weekly Update - 11th May 2017
Investment Strategy Weekly Update - 4th May 2017
4 May 2017
: Dominic White, Raphael Olszyna-Marzys, Michael Hessel, Ben Blanchard, Zahra Ward-Murphy, Philip Isherwood, Stefano Di Domizio, David McBain, Chris Turner
Watch: Investment Strategy Weekly Update - 4th May 2017
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