Navigating Market Complexities: Insights from the Trading Desk | EP172
Release Date: 11/26/2024
The Long View: Global Equity Positioning in Uncertain Markets | EP 188
Art of Boring
In this episode, global equity co-manager, Manar Hassan-Agha, examines how tariff policies have created uncertainty for businesses, particularly impacting capital deployment decisions and supply chains. Manar explains how a focus on asset-light, service-oriented businesses with recurring revenue provides resilience during volatile periods, with limited direct exposure to tariff-vulnerable exports. Through specific company examples like Admiral Group, UnitedHealth, and a beauty products business, he illustrates how the team evaluates short-term price movements versus long-term intrinsic value,...
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Investment Opportunities in a Changing Military Landscape | EP 187
Art of Boring
In this episode, we discuss the defense industry's evolution with equity analyst Joshua Samuel. He highlights the historical underinvestment in European defense, the recent increase in defense spending, particularly Germany's program, and the strategic importance of land systems. The conversation highlights how the current geopolitical environment has transformed defense from an underperforming sector to an investment opportunity, though valuations for companies like Rheinmetall now reflect much of this potential. Key Takeaways: Historical Underinvestment: European military spending dropped...
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Finding Silver Linings: International Investing Through Trade Policy Turbulence | EP186
Art of Boring
In this episode, portfolio manager, Peter Lampert discusses international equities and the impact of tariffs on portfolio management. He provides insights into how his team has been preparing for potential tariffs since Trump's campaign, explaining that most of their international portfolio companies have limited export exposure to the U.S. and instead operate primarily in domestic markets across various regions. He highlights their strategic decision to exit positions that are heavily dependent on global trade, while maintaining confidence in businesses with resilient management teams capable...
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Quarterly Update | Q1 2025 | EP185
Art of Boring
In this Quarterly episode, Crista Caughlin, lead portfolio manager for Canadian bonds, and Jeff Mo, lead portfolio manager for U.S. midcaps, discuss market performance through Q1 2025 and the significant volatility that followed in early Q2—particularly after "Liberation Day" when the Trump administration imposed sweeping tariffs, followed by retaliation from other countries, and then a partial pause. The discussion explores how these trade tensions have created uncertainty affecting business confidence, consumer spending, and investment decisions. Crista explains that the growth outlook has...
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Market Update: April 8, 2025 | EP184
Art of Boring
Mawer President and portfolio manager, Jim Hall, discusses the current market environment and the team's approach to risk management. The conversation covers what triggered the vast volatility and uncertainty seen in markets, potential scenarios to come, and what the team at Mawer is doing about it. He emphasizes the importance of staying calm, being prepared, and diversifying portfolios to manage risks. Host: Andrew Johnson, CFA, Institutional Portfolio Manager Guest: Jim Hall, CFA, MBA, President, Portfolio Manager This episode is available for download anywhere you get...
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When Tariff Waves Crash: Maintaining Course in Volatile Markets | EP 183
Art of Boring
In this episode, U.S. mid cap equity portfolio manager, Jeff Mo, discusses the market's sharp sell-off following President Trump's announcement of widespread tariffs on nearly all U.S. trading partners. He provides both short and long-term perspectives on potential economic impacts, including reduced business investment and consumer spending, while explaining that Mawer's investment approach during this volatility remains focused on preparation as opposed to prediction. Key Takeaways: "Liberation Day" Tariffs - Trump administration announced widespread tariffs (10-40%) on most trading...
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U.S. Equity Insights: The Impact of Policy Shifts and AI | EP182
Art of Boring
In this episode, we discuss the early months of the new U.S. administration with Grayson Witcher, lead portfolio manager for the U.S. equity strategy at Mawer. Grayson touches on the impact of tariffs, including the practical and unpredictable aspects of tariffs and how they influence decision-making. Grayson also shares insights on the potential long-term effects of the AI boom and highlights recent portfolio adjustments in response to evolving market dynamics. Key Takeaways: The market initially surged post-election but has since reversed, with the S&P 500 dropping below election...
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Credit Markets: Risks, Rewards, and the Road Ahead | EP181
Art of Boring
In this episode, we discuss credit markets with Brian Carney, lead portfolio manager of the Mawer Global Credit Opportunities strategy. Brian touches on the tightening of credit spreads, risks in the leveraged loan market, and the limited compensation for high-yield bonds relative to their risks. He also reviews concerns about U.S. government credit quality, private credit profitability, and corporate policy shifts. Looking back on Mawer's GCO strategy performance in 2024, Brian highlights future plans for growth, process refinement, and team expansion. Key Takeaways: Credit spreads are...
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A “Balanced” Perspective Amid High Uncertainty | EP180
Art of Boring
In this episode, balanced portfolio manager, Steven Visscher, covers 2024 performance, asset allocation decisions, trade uncertainty, potential tariffs, and AI-driven productivity growth. Above all, he emphasizes long-term discipline, diversification, and avoiding emotional investment decisions in an unpredictable market environment. Key Takeaways: The balanced portfolio saw strong absolute returns in 2024, with all asset classes performing well. Despite early economic concerns, inflation eased without a recession. Relative performance lagged benchmarks, causing some disappointment. The...
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Navigating Tariff Tensions in Canada: Risks and Opportunities | EP179
Art of Boring
In this episode, we discuss the escalation of U.S./Canada tariff tensions with Mark Rutherford, co-manager of Mawer’s Canadian equity strategy. Mark provides historical context of how we got here; highlights the potential economic impact tariffs may have on the Canadian economy; provides specific portfolio holding examples of how businesses and industries may be affected; and mentions several potential benefits for Canada. Ultimately, he stresses that adhering to a disciplined, long-term investment approach is vital amid uncertainty. Key Takeaways: In the U.S., manufacturing’s decline...
info_outlineIn this episode, we discuss market insights with two representatives from the trading desk: Rita Tien, who trades the Americas from Toronto, and Peter Dmytruk, who trades Asia from Singapore. Rita and Peter highlight the complexities of trading, emphasizing the importance of regional differences and the role of the trading desk in executing investment decisions. They discuss the impact of the Japanese carry trade, the shift to T+1 settlement cycles in the U.S. and Canada, and the influence of ETFs and retail investors on market volatility. They also touch on the role of multi-strategy hedge funds and the challenges of managing market risks. The conversation underscores the need for long-term investment strategies and the importance of understanding market structures and dynamics.
Key Takeaways:
- The trading desk plays a critical role in executing investment decisions effectively, navigating market nuances and regional differences.
- Market events like U.S. elections and Fed rate decisions significantly impact markets, requiring traders to discern meaningful signals from noise. While short-term volatility is challenging, the focus remains on executing trades aligned with long-term strategies.
- The Japanese carry trade impacts markets, influencing businesses and structured products. Sudden market moves, like Japan's interest rate hike, highlight the importance of communication to assess potential impacts on investment theses.
- In the U.S. and Canada, the shift to T+1 settlement reduces settlement risk and margin requirements by accelerating fund transfers but adds complexity for global trades due to mismatched settlement cycles.
- Market volatility is influenced by zero-day options, high-frequency trading, retail investor activity, and leveraged ETFs. Retail-driven markets such as India, Korea, and Taiwan showcase momentum-driven dynamics, while recent SEC rules aim to protect retail investors and improve liquidity access for institutional players.
- ETFs significantly influence market dynamics, concentrating liquidity and volume, especially during closing auctions, where up to 20% of daily trading occurs. This impacts trade timing, crowding in top-weighted stocks, and creates potential price distortions affecting subsequent trading days.
- Multi-strategy hedge funds, or "pod shops," drive market overcrowding by leveraging similar strategies, such as M&A arbitrage or index rebalancing. This amplifies market risks, creates volatility during downturns, and provides opportunities for disciplined long-term investors amid rapid shifts.
- Crowded, momentum-driven trades fueled by leverage and quantitative models can create challenges for disciplined investors, though opportunities arise in volatility. Balancing exposure to popular names with underappreciated companies can mitigate risks while benefiting from structural market inefficiencies.
Host Name and title:
Rob Campbell, CFA
Mawer Institutional Portfolio Manager
Guest names and titles:
Peter Dmytruk, CFA, P. Eng.
Trader
Rita Tien
Equity Trader
For more details and full transcript visit: https://mawer.com/the-art-of-
This episode is available for download anywhere you get your podcasts.
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Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com.
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