Sweating pensions in the post-retirement phase

RetirePeter Nurcombe-Thorne, Director at Rosebank Wealth Group writes that for those concerned about funding their retirement, splitting the years of retirement into distinct phases could make planning easier. His article considers the options of those who have already retired and have to find ways to eke out their savings. To read more, click here.

Highly unusual US treasury yield pattern not seen since summer of 2000

MishShedlockIn this article columnist Mish Shedlock point out that the patterns of US treasury yields have shifted. 'There's something going on that we have not seen on a sustained basis since the summer of 2000', he writes. His graphs show that there are rising yields for three and six-month bonds, but falling yields on five-year bonds. In his view this is signals that the US economy is not strengthening as generally thought. For more, click here.

"10-Year Treasury Yields Headed to Zero Percent": Saxo Bank CIO

SteenJakobsenSteen Jakobsen, the Chief Investment Officer and Chief Economist of Swiss-based Saxo Bank is more pessimistic than most economists right now. In this article he writes that investors should prepare themselves for still-lower government yields, the flattening of yield curves (financial sector underperformance), and expected returns for stocks that on a good day with tailwinds will do 2-3% per annum versus 9-10% historically. To read more, click here.

The value of financial advice

InnovationResearch conducted by researchers at the International Longevity Centre in the UK and released in July 2017 found that those who received financial advice in the 2001-2007period had accumulated significantly more liquid financial assets and pension wealth than their unadvised equivalent peers by 2012. The research was based on data from the largest representative survey of individual and household assets in Great Britain, the Wealth and Assets Survey. For more, click here.

Finances in Retirement: New Challenges, New Solutions

RetireIn 2012 Merrill Lynch and Age Wave began a strategic collaboration to understand how they could help guide Americans towards a more satisfying and comfortable retirement. This report, which was published in February 2017 tracks the changing financial retirement landscape. It shows that more Americans must take greater responsibility to fund their retirement in new ways. It also shows that for 72% of Americans, financing uncertain health costs presents the biggest challenge. Click here to read more.

Leisure in Retirement: Beyond the Bucket List

RetireIn the United States an estimated 10 000 people retire every day. This study, which surveyed 3 700 people, was co-authored by wealth managers Merrill Lynch and think tank Age Wave and was completed in January 2016. It concludes that due to all-time high life expectancy and ‘time affluence’ people are seeing retirement as a new beginning and not a finish line. To read more, click here.

Refreshing when asset managers are open about their mistakes

DawidKrigeAn illuminating question for asset managers in any due diligence process is 'Please tell us about some of the stock picking errors you have made in the last year or so?' Many fund managers are uncomfortable with the question and put a positive spin on their responses. In a refreshing departure from the tradition of hiding mistakes, London and Shanghai-based asset managers Cederberg Capital, led by ex-South African Dawid Krige has showcased investment errors in the passages his London office in a 'wall of shame'. To read more, click here.

The S&P 500: Just Say No

MattKadnar JamesMontier2GMO is a global investment management firm which was founded in North America in 1977 and now has offices in Europe and Asia-Pacific. Two of the firm's asset allocation team, US-based Matt Kadnar and European-based James Montier collaborated on writing this article on passive investing. 

In their view, as more and more investors turn to passively-managed mandates, the opportunity set for active management increases. Secondly, they believe that a decision to allocate to a passive index ignores the most important determinant of long-term returns: valuation. To read more click here.

All roads lead to Rome

Jerry 36SouthIn this article Richard 'Jerry' Haworth ex-South African and CEO and CIO of London-based 36 South Capital Advisers LLP puts the case for diversification into alternative asset-types. He says that low interest rates around the world have created a 'super-correlation' between different asset classes, which are now all bound together. Using a gambling formula called the Kelly Criterion, he argues that a possible investment scenario as markets become more volatile is a two-tailed pay-off. He predicts that only those with 'non-traditional diversification of some sort will survive in a meaningful way'. To read more click here.

Stats SA Quarterly Labour Survey: 43.3% of South Africans of working age are employed.

StatsSA logoThe Quarterly Labour Force Survey (QLFS) is a household-based sample survey conducted by Statistics South Africa (Stats SA). It collects data on the labour market activities of individuals aged 15 years and older who live in South Africa. However, this report only covers labour market activities of persons aged 15–64 years. The latest survey shows that the absorption rate (the proportion of the proportion of the working-age population that is employed) declined to 43.3%. To read more click here.

Happiness is a normal yield curve

JohnMauldin2 2John Mauldin writes that investors should be cautious in the present market. In this article he draws attention to the fact that the S&P 500 cyclically adjusted price-to-earnings (CAPE) valuation has only been higher on one occasion, in the late 1990s. It is currently on par with levels preceding the Great Depression.Other alarm signals are that over the last 10 years, S&P 500 corporations have returned more money to shareholders via share buybacks and dividends than they have earned and that at $8.6 trillion, corporate debt levels are 30% higher today than at their prior peak in September 2008. To read more, click here.

Howard Marks: There they go again - again

HowardMarksLos Angeles-based Howard Marks is an American investor and commentator. After working in senior positions at Citibank he joined TCW (Trust Company of the West) in 1985 before becoming a co-founder and co-chairman of his present company, Oaktree Capital Management. He is credited with calling the 2008 financial crisis and says that 'this is a time for caution'. Read more by clicking here.

Trying to figure out the what the Federal Reserve is thinking

bhunt2 2Market commentator Ben Hunt writes in the following articles ‘Tell my horse’ and ‘Post-Fed follow up’ that the United States Federal Reserve Bank is looking for excuses to tighten monetary policy, (restrict money supply, or increase interest rates with the objective of reducing spending and inflation) not excuses to weaken monetary policy. In his view, the Federal Reserve Bank’s central concern is maintaining a low unemployment rate; every other data point, including a market sell-off or a flat yield curve or a bad CPI number is secondary.

The South African retirement system

Pensions2Designing a pension fund system that is fit for purpose and encourages people to save for their retirement is one of the main challenges of governments around the world. In South Africa, the Constitution requires the state to fulfil certain functions with respect to social security. New proposals require significant cross-subsidisation from employed South Africans to other groups.

Rosebank Wealth Group director Peter Nurcombe-Thorne looks at some of the problems and solutions. Click here for more.

A world without retirement?

Pensions2Policy makers around the world are grappling with the problem of adapting retirement legislation from the 1950s to new family structures, aging populations and lifetime unemployment. Rosebank Wealth Group director Peter Nurcombe-Thorne looks at some of the problems and solutions. Click here  to read more.

Projected SA growth for 2017 remains at 0.8%: IMF

IMF logoEarlier this week, the International Monetary Fund revised growth forecasts of world economic growth upwards for both this year and 2018, while maintaining South Africa's growth outlook at 0.8%. For more, and details of forecast growth in other countries, click here.

You Look Like I Need a Drink

USflagRichard Fisher, the author of this speech below, was the President and CEO of the Federal Reserve Bank of Dallas between 2005 and 2015. He is on record as being one of the first to sound the alarm about the sub-prime housing crisis in 2007. In 2013, he was outspoken in opposition to the way quantitative easing was being pursued by Fed chair Ben Bernanke and his board. He is a member of Washington D.C. based think tank the Inter-American Dialogue. To read the speech, click here.

What, Me Worry?

ActivePassiveThis article by John Mauldin takes a close look at the dramatic ascent of passive indexing and the side effects of these products. He writes that passive investing is perverting the financial markets' core economic function; the efficient capital allocation. In terms of stimulating buying interest, a company's fundamental business prospects are now much less important than its presence in (or absence from) popular indices. He says that ETFs have created an environment in which badly managed companies can still see their stock prices rise along with those of well-managed companies. Read more

Surviving in a market you don't trust but where you must act as if you do?

ActivePassiveBen Hunt, Chief Investment Strategist at Salient, past academic and columnist writes about the toll exacted from the collective embrace of ETFs + index products and through our collective tolerance for central bank magic spells. He says that this creates collective risk on a terrible scale, but notes that there's no career risk in collective risk. In particular, he attempts to dispel the notion that ETFs and index products are somehow 'passive' investments. On the contrary, he says that they are 'the very instantiation of active portfolio management, where investors are making an inherently and completely active decision on this sector versus that sector'. Read more

Angst in America, Part 6: Middle Class Blues

JohnMauldin2 2In this article John Mauldin writes that the coming pension crisis will put quite a dent in expectations. He suggests that Americans should have their houses in order before the next rough patch hits. He thinks that the US is approaching that moment when the two greatest bubbles in human history , sovereign debt and government promises will burst, and politicians and central banks will be forced to take actions that are unthinkable today. Read more

Angst in America, Part 5: The crisis we can't muddle through

JohnMauldin2 2In this article John Mauldin explains why pension angst in the United States is understated.He says that pension fund returns come from two sources; cash contributions and interest, dividends, and capital gains earned on the investments into which those cash contributions are placed. But neither of these sources are is producing returns at the necessary levels to deliver the promised benefits. In many cases there is a vanishingly small chance they ever will produce enough. 'And the longer we go without fixing the problem, the smaller the chance becomes', he writes. Read more

Angst in America, Part 4:Disappearing Pensions

JohnMauldin2 2In this article, John Mauldin writes that there was once a time when many American workers had a simple formula for retirement: You stayed with a large business for many years and then gratefully accepted a gold watch and a monthly check for the rest of your life. These pensions, he writes, are all but gone from US private-sector employers, but they are still common in government, particularly state and local governments; and they are increasingly problematic. They are another source of angst for retirees, government workers who want to retire someday, and the taxpayers and bond investors who finance those pensions. Read more

Angst in America, Part 1: Aimless Men

JohnMauldin2 2This series by John Mauldin explores the consequences of sociological anxiety in the United States due to unemployment. He uses US statistics to illustrate his points but the comments he makes have a universal application. He writes that the moribund economy in the United States will have a hard enough time supporting millions of Baby Boomers who lack sufficient retirement savings and that adding millions of nonworking young and middle-aged men to the dependency pool won't help. Read more

Angst in America, Part 2: Men without work

JohnMauldin2 2In the second part of this series John Mauldin writes that there are about 10 million American men of prime working age (25 to 54) who have simply dropped out of the workforce. He adds that the great majority of them have not only dropped out of the workforce, they have also dropped out from any commitments or responsibilities to society. It is not just the labour force they are not participating in; they are not participating in the normal ebb and flow of community life. He notes that while American workers without college degrees have suffered financially for decades it has now come to light that the health consequences of this state is deadly. Read more

Angst in America, Part 3: Retiring Broke

JohnMauldin2 2In the third of this series by John Mauldin, he looks at the long term consequences of the fact that so many Americans have poor retirement. He notes that 33% of Americans have no retirement savings at all; another 23% have less than $10,000; and a further 10% have less than $50,000. So that's 66%, a full two-thirds of Americans, with either no savings at all or not enough to generate significant income. (If you have $50,000 and can pull out 4% a year without drawing down principal – which is hard to do – you'll get something like $160 a month.) Read more

Will Tax Reform Fare Any Better Than Obamacare Reform?

TaxUSColumnist Danielle DiMartino Booth, a former adviser to the president of the Dallas Fed, notes that post the failed attempt to reform Obamacare, all eyes are now on tax reform. 'Can House Speaker Paul Ryan herd enough House cats in a tax bill that's also acceptable to the Senate?' he asks. While it might appear that there is strong support, a closer look shows that the tax code is fraught with squabbles, procedural hurdles and difficult trade-offs. Read more

Tax Reform: The Good, the Bad, and the Really Ugly – Part Five

JohnMauldin2 2In this, the fifth and final edition of the series on tax reform John Mauldin writes that the time for the United States us to make good choices about budgets, taxes, and our economy in general was 17 years ago. 'We are now dealing with the consequences of both the Bush and Obama administrations'compounding poor budgets, spending, and tax decisions – including, in many cases, crucial decisions they declined to make. But some of these problems go back 40 years or more', he writes. Read more

Tax Reform: The Good, the Bad, and the Really Ugly – Part Four

JohnMauldin2 2John Mauldin dedicates this article to analysing trends in the US jobs market and the possible impact of lowering corporate taxes. Unlike President Donald Trump,he contends that no amount of tax reduction will 'get jobs back' from China and Mexico, as 80% of manufacturing jobs have not been lost to globalisation but to increased automation.

He writes that the shrinking workforce participation is not a recent trend and has been happening since the '60s. He writes that it seems that with every major technological advance, a certain portion of the working population doesn't find a way forward to take advantage of the next set of opportunities.

Stats SA's Quarterly Labour Force Survey

StatsSA logoFor some perspective on John Mauldin's article above, read the enclosed Quarterly Labour Force Survey released by Statistics SA on 14th February 2017. This research estimates SA's unemployment rate at 25.5% (up from 24.5% 12months before). To be classified as 'employed' a person of working age has to work for one hour. Our labour absorption rate which measures the proportion of the working-age population that is employed fell from 44.2% to 43.5% between Q4 2015 and Q4 2016 while the labour force participation rate (those willing to work, or working) rose from 58.5% in Q4 2015 to 59.2% in Q42016. Read more

Trump and the weak dollar

USflagIn this article Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management writes that by this time in February, all prior Presidents had their agenda and economic policy announced. But Trump doesn't seem to have a direction and strategy except for the "Tweeter-attack mode". At the first joint session of Congress, there will high expectations for a tax plan, repealing Affordable Care Act, Obamacare, and his trade policy which could include some comments on "the unfair FX policy by China & Germany alike". Read more

The evolution of competition

bhunt2 2In this article Ben Hunt states that the Trump presidency is breaking Americans. Not because of the specifics of his policies or whether they're right or wrong or anything like that. 'It's breaking us because we now routinely talk past or yell at our friends, family, and fellow citizens, despite vast common ground on the really big ideas of what it means to be Americans or, more fundamentally still, a good human being,' he writes. Read more

Not all investment fees are equal

fees2In this article, Bradley Anthony, Chief Investment Officer of Fairtree Capital comments on the explosion of passive investment products, driven by greater appreciation of investment cost as well as the dearth of excess return or alpha amongst active managers. He introduces the concept of the value ratio, arguing that it is impossible to determine whether costs are high or low without framing that cost in the context of the value provided. He argues that it is a mistake to focus on costs in isolation. Read more

Tax Reform: The good, the bad, and the really ugly—Part three

TaxUSIn this article, Mauldin continues with his theme of tax reform. He explains that he is not enthusiastic about the proposed Border Adjustment Tax, BAT as he fears it will bring serious macroeconomic side effects, and potentially trigger a global recession, without necessarily achieving its objective of stimulating the manufacturing base in the United States. Read more

Tax reform: The good, the bad and the ugly. Part 1

TaxUSInvestment commentator John Mauldin looks at the proposed tax reforms in the United States and wonders whether or not they will meet their objective; the creation of new jobs and the boosting of the economy. 'But which jobs, what kind of jobs, and where?' he ask. He predicts that even if the Apple iPhone were to be made in the US, this initiative would not create many jobs as the work would be done on a robotic assembly line. He also expresses concern that the future might mean losing more service jobs in retail centres due to the unstoppable trend to online shopping. Read more

Tax reform: The good, the bad, and the ugly. Part Two

TaxUSIn this newsletter commentator John Mauldin writes that large parts of the US economy exist only because the tax system makes them profitable while others don't exist because the tax system makes them unrewarding. In part two of his series on tax reform he examines the IRS commitment to improve the tax system so that it is simpler, fairer, flatter and creates jobs and growth. Highlights of the new deal include a reduction of the top corporate tax rate from 35% to 20% and a new three-bracket tax rate schedule with the top personal tax rate to only 33%. Read more


TaxUSDr Lacy Hunt of Hoisington Investment Management his partner, Van Hoisington, produce a quarterly letter aimed at the investment community in the United States. In this edition they write how in their view proposed US tax reforms will face enormous headwinds that were not there during previous tax-reform eras. This might mean that the benefits that Republicans think will accrue are likely to take longer to appear and be less than expected, which will mean that it is going to take more than what is presently proposed to jump-start the economy. Read more

The Euro may already be lost

EuroTuomas Malinen, CEO of GnS Economics, postdoctoral researcher at the University of Helsinki writes that January 2017 marked the 18th anniversary of the European common currency, the euro.Despite its success from 1999 to 2007, he writes, after 2008 the euro became a burden for many of its members. Living standards in Italy and Greece are now below the levels when they joined the euro, while Finland (the only Nordic country using the euro)is also the only Nordic country that has not recovered from the financial crash of 2008. Read more

Post inauguration (1)

DonaldTrumpThis editorial from the New York Times 'What President Trump Doesn't Get About America' describes Trump's inauguration speech as 'beyond disappointing'.The article describes his sweeping exaggeration as he speaks of carnage in the inner cities and highlights the fact that when he promised to 'get our people off welfare and back to work' that as of 2016 the number of people receiving federal Temporary Assistance for Needy Families benefits is down by 70% since 1996 and that the unemployment rate has fallen since 2009. Read more

Post inauguration (2)

DonaldTrumpIn this article, written on January 22nd, John Mauldin uses a number of anecdotes to argue that the Trump transition team might not be in complete disarray. While conceding that Trump's management style is going to drive both the media and much of the country nuts, and that no one is in agreement about the proposed tax reform, he describes the process of tackling priorities in the new administration; the creation of a 'landing document' in over 30 departments and an anecdotal conversation with two economists that shows a pragmatic side of the new president. Read more

Update 2017: A Shifting Global Economic Landscape

IMFThis report, produced by the International Monetary Fund predicts that economic activity is projected to pick up pace in 2017 and 2018,especially in emerging market and developing economies. However, it says, there is a wide dispersion of possible outcomes around the projections, given uncertainty surrounding the policy stance of the incoming U.S. administration and its global ramifications. Read more

Forecasting with Friends

JohnMauldin2 2In this article, John Mauldin assembles a cast of his friends and asks them on their views on a range of topics including cuts in corporate taxes, disinflation, deregulation, inflection points and matters affecting the Republican Party. Read more to hear the view of the Gavekal team,led by co-founders Charles Gave, Louis-Vincent Gave, and Anatole Kaletsky, David Rosenberg of Gluskin Sheff and Chris Wood of CLSA, author of newsletter 'Greed andFear'. Read more

2017 Forecast: Sceptically Optimistic

JohnMauldin2 2John Mauldin writes that his theme this year: "Paradigm Shift: A De-globalising World." He writes that never before have global events weighed so heavily on your investments. This is the reason that geopolitics will be a focal point in 2017. He says that the Republican Party in the US are likely to hit the ground running, and it will also be a pivotal year for China; not least among the challenges will be having to deal with a US president who refuses to play by Beijing's rules. Read more

A fresh breeze of reform blowing through India

Peter smallerThis article by director of Rosebank Wealth Group director Peter Nurcombe-Thorne presents two lingering images of a recent investment trip to India. The group's visit to India left no doubt of the scale of India's rising middle class and the concomitant potential for economic growth. Secondly, the widespread support of Prime Minister Modi's efforts to tackle the scourge of 'black money' in India signalled new appetite for anti-corruption measures and support for government. Certainly, nobody can afford to ignore India. Read more

The Art of the Probe

bhuntColumnist Ben Hunt is primarily known for using game theory to get a better understanding of the investing environment. He has written about the game of markets as well as about how new technologies and new perspectives play a role, many times. This article looks at one specific strategy that can be used to become a better game-player; the art of the probe or how you can find out where you stand relative to the markets/ poker game. Read more

India soars high

IndianFlagThis fascinating report on India and it's opportunities from consultants KPMG highlights the recent regulatory reforms, key policies of the Indian government and their impact on business. It includes an overview of the Indian economy and the consequences of the "population dividend". Read more

American Hustle

USflagIn his inimitable way, Ben Hunt attempts to come to terms with the results of the implications of the recent US election. "There are three questions I'd like to answer in this Epsilon Theory note: what did the Narrative Machine tell us about the market immediately before and immediately after the November 8 election, what am I preparing for now as an investor and what am I preparing for now as a citizen? I'm giddy about the first, quietly confident about the second, and pretty darn depressed about the third. Could be worse, I suppose". Read more

What Should Trump Do? – Your Questions Answered

USflagIn this article John Mauldin does his best to answer questions about American debt, the implications of reducing corporate tax to 15% and the challenge of getting the costs of healthcare under control. "The government has only three sources of revenue: taxes, borrowing, and monetization. Borrowing money runs up the debt, and we are getting very close to the point where ballooning debt becomes debilitating". This means that the US will have to increase revenues to pay for what is needed. Read more

What should Trump do now?

USflagIn this article, John Mauldin highlights the difficulties facing the Trump administration and makes some suggestions as to where he could focus his efforts. He writes that the American people want several incompatible things at once including expensive healthcare, tax cuts and a balanced budget. He says that only two of these three are possible. Read more

The Election: Making difficult choices

USElectionIn this article John Mauldin gives his thoughts on the important issues facing the voting public in the US. He writes that he understands the passion around many of the issues the candidates are talking about, which include immigration, income inequality, taxes, defence and overseas wars, Supreme Court nominees, healthcare, Social Security and other entitlements, the environment and regulations, and a host of other things. But for him, top of mind is the future of the economy. Read more