INVESTMENT THOUGHTS

The upcoming U.S. Presidential Election has been on the minds of the majority of Americans and investors alike. Investors like to look ahead and predict what the election will look like and subsequently make investment decisions based on what they feel the new or continuing administration policies will be. Before we take a look at what is on investors' minds and which asset classes could perform well post Election Day, I want to point out that as long-term investors, we aren't basing any decisions based on who is elected. History has shown that the party in power is not a significant differentiator of investment returns: there are too many other factors, variables, and events that impact markets and assets over time.

Last month's resignation by Japanese Prime Minister Shinzo Abe was a surprise. Given Japan's size and role from a global economic and capital markets perspective, I wanted to dive deeper into where things currently stand and how investors are approaching the country.

Throughout this pandemic, there have been two big capital market themes that we have been paying close attention to and highlighting in our updates: the dispersion between growth (predominantly tech) and value names, and the re-opening of the U.S. economy. Here is an update and our latest thoughts on where we stand in both of those cases, especially how closely tied they are to one another.

While we have written a lot of updates about what we’re seeing in the U.S. markets, we thought it would be important to provide our thoughts on what is going on in the rest of the world. This week alone saw two major market drivers – the announcement of a record €750b rescue fund by the European Union and further deteriorations in the US-China relationship with each party closing down a consulate in each other’s country.

Given everything that has transpired over the last few months, it is almost hard to believe that there is another half a year to go - a half that much like its predecessor will have its own set of opportunities and risks. We will look back at the first half of the year in our quarterly review, but for this week we wanted to provide our thoughts around the current investing landscape. This piece has been put together after reading numerous research reports as well as multiple conversations with teams we invest with.

In the last few weekly pieces that we wrote, we identified several factors that investors have cited as reasons for the equity market recovering in the way that it has. One of them is signs of optimism around the economy opening up and things slowly returning to normal. Different investors have differing opinions as to the time frame of a "return to normal" and, what normal would look like - that's what makes the market move. No matter what their opinions are, as data is slowly released, they will reassess their beliefs and their holdings and the market will move accordingly. Using research from Goldman Sachs and Natixis, here is where things currently stand.