Valuations Stretched? Mean:15.48 Median:14.45 Min:5.31 (Dec 1917) Max:123.79 (May 2009) S&P appears overvalued on a trailing P/E basis S&P 500 within 10% of all time high What are fund managers outlook for equities? How are they positioned? Short position constraints? Risk/return: equities vs. fixed income Source: Multpl.com Historic price to earnings ratio, based on trailing twelve month as reported earnings
Volatile Week for Oil Source: CNBC Weekly U.S. Crude futures (NYMEX, November contract) performance Oil as a leading economic indicator Rumours of a release of U.S. Strategic Petroleum Reserves Saudi Arabia suggests increasing supply A strong correlation exists between oil prices and CAD What are managers views on energy prices? Does it align with their views of the economy? Current positioning? FX exposure?
Economic Indicators Consumer Price Index (Sept. 21) Energy Index (Sept. 21) Source: StatCan
Economic Releases ReleaseDate CA – Retail SalesSept. 25 CA – GDPSept. 28 US – Consumer ConfidenceSept. 25 US – House Price IndexSept. 25 US – New Home SalesSept. 26 US – Durable / Capital GoodsSept. 27 US – Initial / Continuing Jobless ClaimsSept. 27 US – Personal Income/SpendingSept. 28
Late August- SEC Proposes Changes to Advertising Restrictions The SEC proposed changes to the advertising restrictions on hedge funds, meaning they could potentially begin to advertise publicly One argument against this is that unscrupulous hedge funds managers may take advantage of uneducated investors What image does that argument give people about the ethics of the industry? Discussion: How will this affect hedge fund performance?
September 17 th - Starboard Value Takes Activist Stake in Office Depot 13.3% equity stake makes it the largest shareholder Public letter issued to Board to push an improvement in operations Office Depot shares were up 10.5% in premarket trading on Monday Is this potentially a strategy we should look at? What are the risks?
China Source: The Economist and Forbes Magazine Chinas Debt to GDP ratio at 16.3% - considerable wiggle-room Ample room for easing can result in a soft rather than hard landing Forbes estimates with Hidden Liabilities, Debt to GDP ratio between 90% - 160% Chinese communist leaders are traditionally very sensitive to inflationary measures due to potential widespread unrest
China Source: The Telegraph and Sydney Morning Herald Chinas manufacturing level fell to its lowest in nine years – HSBC PMI rating of 47.6 Chinas central and local governments launch a 7 Trillion Yuan stimulation package for roads and infrastructure Approved 60 new projects led by railways, roads, harbors, and airports Head of Chinas Central Bank indicated that easing is not an option Zhou Xiaochuan