Page 1
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 1
The buck is back ___________________________________________________________________________________________
"Truth is so obscure in these times, and falsehood so established, that, unless we love the truth, we cannot know
it" Blaise Pascal
Summary
• The dollar appears to have completed its bottoming phase and is set to move higher
• Trump was able to score some notable successes recently, resulting in his approval rating improving substantially
• Higher bond yields caused by rising commodity prices and inflation are the next pain trade for equity and credit markets
• Despite those headwinds, strong fundamentals continue to underpin current market levels
As is often the case in investing, peaks and troughs are
reached at points of extreme optimism and pessimism.
Stock markets tend to top out and turn the other way when
everyone is maximum bullish and I highlighted in previous
Viewpoints that such a point was reached around the end of
last year and early 2018 when some prominent fund
managers started discussing the possibility of a stock
market melt up.
Similarly, I felt that bearishness for the dollar and
bullishness especially for the euro have been near extreme
levels for some time. Euro bullishness was driven by an
acceleration of growth in the eurozone whilst, on the flip
side, markets turned negative on the dollar because of
rising budget deficits, the threat of a trade war and Trump’s
general unpredictability.
Obviously, a certain investment narrative can only be stretched to a point where everything is priced in. Interest-rate
differentials today are pricing in an annual 2.4% depreciation of the dollar versus the euro for every year over the next ten
years. This just doesn’t smell right. Although this is an anomaly that is largely caused by the ECB’s inertia to do anything
about the ultra-low European interest rate regime, it highlights how attractive US yields are at the moment.
Exhibit 1: Performance of different asset classes in 2018
Source(s): ACPI, Bloomberg
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 2
It appears, markets are taking notice and, thus, April saw a turnaround in the dollar’s fortunes. Whether this was just part of a
general bounce in risk assets remains to be seen.
Although equities recovered nicely, the moves that mattered last month took place in currency and interest rate markets. Thus,
the dollar finally managed to stage a rally from oversold levels, driven by rising yields in the US. As a result, the DXY dollar
index gained more than 2%, while the Euro fell 2%, the Swiss Franc 3.7% and the Yen 2.8%.
Exhibit 2: Dollar index, euro and dollar speculative positioning and US 10-year yields
Source(s): ACPI, Bloomberg
The rise in the greenback was accompanied by a reduction in speculative futures positions in euros and a small increase in
dollar long positions. Irrespective of the recent moves, euro optimism as expressed in net long positions is still near record
levels. Rising yield differentials but also faster growth in the US are supporting the stronger dollar. Thus, for the first time since
2015, growth in the eurozone is running below growth in the US (Q1: 2.5% in EZ versus 2.9% in the US).
Although there was no single driver that caused the rebound in the dollar, we believe it is a multitude of factors that led to this
bounce. Receding geopolitical risks are probably on top of the list as a further confrontation between the US and Russia on
Syrian ground was avoided. The third inter-Korean summit in 20 years also appears to be bearing fruit as Kim Jong-un is
caving in on pressure by Donald Trump, promising to end his nuclear ambitions and to destroy a major test site.
This did not come as a major surprise as it was, in my opinion, very unlikely that Kim Jong-un ever intended to attack South
Korea or even the US. His nuclear posturing created a bargaining positioing for a country that is deeply impoverished and
whose millitary is in an extremely bad state. Having seen the equipment of soldiers in the North and especially the border
troops left the impression of a military that is on its last legs. Those troops in most countries, but especially in hermetically-
sealed states would be staffed with elite soldiers and the newest equipment available. In the case of North Korea, these troops
looked like an army from the 1960s or 1970s. Some cynical voices are even suggesting that the test site that Kim is prepared
to destroy is currently unusable and heavily damaged anyway.
Should the reinvigorated inter-Korean dialogue and Trump’s involvement lead to a substantial improvement in relationships
between the two countries with a view of a potential re-unification in the future, then one major potential conflict area in the
world would be eradicated and Trump should maybe be considered for a Noble Peace prize, and deservedly so, in contrast to
his predecessor.
Not much progress was made in the brewing trade conflict between the US and China, however, although I would suspect that
some compromise will be found in the end. Trump will be satisfied if China promises to reduce its trade surplus with the US
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 3
albeit not the amount currently requested. China is likely to also open up somewhat in terms of intellectual property rights and
technology transfer requirements. As the next phase in the development of the country is more focussed on the quality of
growth, the improvement of living conditions and environmental protection, export growth per se will not be of the highest
importance to China’s government.
Furthermore, the country’s leaders probably acknowledge the fact that the trade agreements that are currently in place are
unusual by international standards and the result of a weak negotiation partner. Madeleine Albright finalised the deal at the
time and China became member of the World Trade Organization (WTO) in 2001. However, she was no trade expert and
apparently struggled to see the importance of what are the key issues at hand today. This was in stark contrast to Treasury
Secretary Robert Rubin, who started the negotiations with China but did not make much progress. Under pressure from the
Lewinsky scandal, Clinton needed a success story and replaced Rubin with Albright. She got a poor deal done that is now
being renegogiated. The issues under discussion are sore points not only for the US but most other trading partners too.
Hence, criticism towards Trump’s approach is fairly limited at the moment.
A succesful tax reform, falling unemployment and Trump’s apparent foreign-policy successes in Korea and, to some extent,
Syria are all factors that resulted in a substantially rising approval rating for the President that recovered from a low of 37% at
the end of last year to a recent high of almost 45%.
Exhibit 3: Donald Trump’s approval rating and the dollar index
Source(s): ACPI, Bloomberg
Such a boost in popularity is needed, considering that the midterm elections are only six months away. One could argue that if
a destabilising, or rather paralysing, outcome can be avoided in November, then prospects for a continued US recovery look
promising.
Consistently with a stronger dollar, emerging market currencies and equities suffered as a result. Thus, the Brazilian Real lost
5.7% and the MSCI emerging market equity index shed 0.6% in April and is flat for the year.
The stronger dollar is a major headwind for emerging market performance and the key reason why we have been largely
avoiding the space over the last quarters. In addition, negative fundamental newsflow (Russian sanctions, Turkey,
Argentina,…) is not helping the case. The unusual combination of a strong dollar and rising oil prices is adding further fuel to
the fire as can be seen in weaker currencies of commodity-importing countries such as India.
We continue to be bullish on both, the dollar and oil, which, consequently, would be bearish for emerging markets in general.
We would highlight though that it is overly simplistic to look at EM as one static bloc. Emerging markets today generate the
majority of world GDP and it can be argued that many countries that currently reside in this category, are indeed emerged
markets.
Deficit countries such as India, Indonesia and the Philippines will clearly be more negatively affected from rising oil and
commodity prices than Russia, Saudi Arabia or Chile while China is less impacted due to the size and strength of its economy.
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 4
Exhibit 4: Korean export trade and emerging market earnings growth
Source(s): ACPI, Bloomberg
A sustainably rising commodity complex is a contrarian possibility that investor need to keep in mind today. Oil prices have
been rising for some time now, while copper is consolidating at levels around 50% higher than where it was in 2016.
Agricultural commodities, where the internal price picture is more mixed at the moment, could also move substantially higher
over the medium to longer term.
Exhibit 5: Inflation-adjusted commodity price performance and commodities/US equities ratio
Source(s): ACPI, Bloomberg
Outperformance of commodities during the late stages of an economic cycle is a normal occurrence. It is driven by rising
demand for resources where supply cannot easily be increased in a short span of time. The recent increase in oil prices is a
classic example as outlined in previous months. Thus, oil companies discovered less than 7bn barrels of oil and gas last year,
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 5
the lowest number on record, according to Rystad Energy. Despite the discoveries in shale oil and gas, demand has been
outstripping new discoveries by a factor of more than three times. In addition, upstream capex has declined by USD300bn
since 2014, which could lead to a supply deficit of 16m barrels per day (bpd) by 2025, according to the IEA.
Exhibit 6: Commodities outperform in the expansionary late cycle (lhs) and longest streak of accelerating growth
rates for the US economy (rhs)
Source(s): GS, Bloomberg
Futures markets for oil are beginning to reflect the shortage of required capital by turning into backwardation, a situation
whereby longer-dated oil prices are trading below shorter maturities. This incentivises the holding of longer-dated oil by
creating a roll yield, i.e. the % price discount of oil with a delivery in, say, one year from now compared to the price of spot oil
today. The one-year roll yield is currently around 8%, the highest level in years.
As can be seen in the chart below, backwardation levels can reach more negative territory with roll yields exceeding 25%
(medium panel in the chart below) in rare cases. Usually, when they reach 10% or more, there is a sufficient incentive to
increase capital spending and production to satisfy demand.
Exhibit 7: Spot and one-year forward oil prices
Source(s): ACPI, Bloomberg
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 6
The other effect of steep backwardation is that it deters producer hedging, i.e. storing oil for future delivery, as producers have
to pay a negative roll yield. In a contango market like in 2015, this is a strategy that can pay off hugely as front-end demand is
low. Speculators would buy cheap spot oil, store it in onshore tanks or offshore vessels, pay storage costs and deliver at a
later date at a higher price.
As such, contango and backwardation are temporary states in a market that can be arbitraged away over time. As many
exploration and production companies (E&P) have hedged their production at the moment, one can assume that mark-to-
market P&Ls of those hedges are negative. This is likely to result in less hedging going forward, which will lead to less supply
pressure on the longer end of the curve and, at the same time, more volatile results of E&P companies in the future.
Higher commodity prices will inevitably lead to higher inflation pressure which still is the main medium-term risk to markets as
it might push benchmark yields past a level that can be easily digested by equity and credit markets.
US 10-year yields tested the critical 3% level several times in late April and into May which caused equities temporarily to sell
off. Broad global fixed income indices lost 1.5% and World government bond indices shed 1.9% last month. The 3% level for
the US 10-year bond is an important psychological hurdle and we suspect that it will be taken out sometime soon with a view
to approach the 3.25%-3.5% range which is approximately our target for this cycle. Levels higher than that are unlikely to go
down well with bond and stock markets and would also cause substantial pain in credit and housing markets. Therefore, the
disruption caused by reaching that point would be sufficiently large, in our opinion, for the Fed to abandon any further
tightening.
Exhibit 8: US and EUR inflation expectations and 10-year yields (lhs) and real yields in the US, Germany and the UK
(rhs)
Source(s): ACPI, Bloomberg
The charts above highlight two interesting observations: (1) real yields in the US (almost 100bps) are rising as nominal yields
are climbing faster than inflation expectations. Obviously, should inflation start to accelerate, there is a risk that yields will
continue to rise in tandem, (2) Real yields are still deeply negative in the eurozone and the UK at a time of record GDP growth
(for the former) and budget surpluses in several countries. This raises the most interesting question for the next few years:
Where will interest rates be in Europe when the continent enters the next recession?
In stark contrast to the eurozone, the economy in the UK is currently not exactly at the risk of overheating. First-quarter GDP
growth was 0.1% qoq versus an expectation of 0.3%. Year-on-year, the economy grew by 1.2% versus a consensus of 1.4%.
This is one of the slowest growth rates among all developed nations. Fortunately, as a result, inflation remains under control,
which came in at 2.5% for March year-on-year and 0.1% month-on-month.
Recent Sterling strength may explain part of that weakness. Thus, the currency rose by more than 6% since the end of last
year until the middle of April. However, subsequently, as the dollar began to recover, signs of a UK slowdown and concerns
about a future Labour government emerged and the Sterling lost all its gains and is now flat for the year. As we are expecting
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 7
a continued recovery of the dollar, the Sterling should, on balance, weaken further. All else equal this could lead to somewhat
higher growth and a return of inflation in the country.
It is important to remember in the context of inflation figures that eurozone headline inflation numbers, other than in the US,
exclude to a large extent any impact from house prices. The European HICP (Harmonized Index of Consumer Prices)
excludes shelter costs. This also makes inflation targets of 2% in the US and Europe incomparable as the underlying inflation
indices are totally different. The UK’s Office for National Statistics recently amended its CPI index in order to reflect the cost of
housing. As a result, the new index (CPIH) is a more comprehensive and representative measure of true inflation.
On the topic of realistic inflation measurement, it is noteworthy that the New York Fed’s Underlying Inflation Gauge index UIG
reached a new post-GFC high of 3.2% in April whilst the official CPI is still lagging that figure. The UIG tries to capture inflation
information from a broad set of prices in real and financial markets. Should this trend translate into an accelerating CPI, then
inflation expectations should also reprice, potentially driving benchmark yields substantially higher.
Exhibit 9: New York Fed Underlying Inflation Gauge index (UIG, black) and US consumer price index CPI (red)
Source(s): ACPI, Bloomberg
While strong underlying economies in the US and elsewhere are enough of a reason for higher yields, the Fed’s quantitative
tightening is certainly contributing to the pressure. Thus, last year, total Fed assets fell by just under USD8bn while this year
so far until the 2nd May, its asset base declined by more then USD92bn. Going forward, this factor is unlikely to diminish
unless the economy enters a recession.
The US yield curve continued to flatten last month as the 10-2 year bond yield spread is now at merely ~45 basis points, the
lowest since 2007. What looks slightly more concerning is the yield curve for real interest rates. Thus, the 10-5-year real yield
spread is now close to 10 bps - also the lowest value since 2007. Whether the curve inverts from current low levels or not is
almost secondary at this stage as the implication is for some slowdown in the economy down the road. Historically, whenever
the US economy was running at such a pace and unemployment was close to being eradicated, the yield curve dipped into
inverted territory albeit only briefly. We are not there yet but certainly very close.
Rising yields in the US are driving the differential between US and eurozone yields from one extreme to another. Thus, the
difference of US and German 10-year yields is now at just under 250 bps, the highest level in many decades. This is partially
caused by US outpacing German inflation but also on an inflation-adjusted basis the spread is still wide at almost 150 bps.
One plausible way for this spread to narrow would be a pickup in European over US inflation which should, in turn, lead to a
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 8
weaker euro and a stronger dollar. A significant base effect in favour of European inflation is one of the sources for such a
possible pickup in the medium term.
Exhibit 10: The US 10-2 yield curve and unemployment rate
Source(s): ACPI, Bloomberg
Meanwhile, the Fed’s favourite inflation measure, PCE inflation, has reached 2% yoy in March, from 1.7% in February. This
was primarily caused by a strong base effect as the PCE deflator fell 0.2% in March 2017. As for the global context; the
unusual combination of rising oil prices and a resurging dollar is likely to lead to higher inflation outside the US than in the US
itself. Should oil prices rise further, as we expect, they are also more likely to contribute to an economic slowdown. According
to the FT, for the bottom 40% Americans in terms of income distribution, the higher fuel prices since 2016 have already
exceeded the benefits from tax cuts passed last year.
Further rising yields could potentially end the state of complacency in stock markets about the goings on in the fixed income
world. And although the level of 3% is as arbitrary as 3.1% or 2.54%, at some point correlations between bonds and equities
will start to reverse. In the past, at lower yield levels, bond yields and equity prices tended to be positively correlated.
Exhibit 11: Correlations between bonds and equities can change at certain levels of yield
Source(s): BCA
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 9
Lower yields that are rising are associated with an economic recovery that is also positive for equity prices. Higher yields that
continue to rise, however, are more closely linked to rising inflation and financial tightening, which is negative for stocks. It is
this negative correlation that currently prevails between stock and bond markets.
After two negative months for stock markets, equities recovered in April. Although largely a technical bounce from oversold
territory it was also driven by a strong earnings season. Thus, for the S&P500 in the first quarter, average earnings per share
grew by over 23% whilst revenues increased by almost 9% so far. Especially profit growth is surprising on the upside,
exhibiting the highest surprise percentage in many quarters. Interestingly though, although headline index performance
recovered, many of the stocks that reported stronger-than-anticipated earnings did not perform as well as one would expect.
There was a clear tendency for these names to consolidate rather than rally further. Sell-on-good-news was the motto, it
appears.
In 2017, investors have clearly priced in a substantial part of the earnings growth that businesses are now reporting. This can
be seen in the chart below whereby earnings expectations are still rising but the market is taking profit on good news.
Exhibit 12: S&P500 and 2018 earnings forecasts (lhs) and earnings revisions (rhs)
Source(s): ACPI, Bloomberg, Yardeni
Earnings revisions for the US have been the strongest in decades which is reflected in actual results as they are coming
through but buying on earnings revision spikes is usually not a great idea as markets tend to correct subsequently. The profit
lies in buying in anticipation of the earnings revision rather than buying after the fact. In terms of quarterly earnings,
companies such as Amazon and Intel reported great results but traded lower post the announcement. One noteworthy
exception was Facebook, a position that we like on contrarian but also valuation grounds, that reported excellent numbers and
user growth where the stock rose as a result. Due to the preceeding controversy around the company, sentiment was
depressed such that the only way for the stock to react after the numbers was to move higher. Despite the massive backlash
against the company, Facebook managed to grow the number of monthly active users from 2.13bn to 2.2bn between Q4 2017
and Q1 2017, an increase of 70 million users or the equivalent of a decently-sized country.
With fixed income in the doldrums, equities are therefore the asset class of choice that has to generate the vast majority of
returns for investors in the medium term. Fortunately, after the consolidation in Q1, it looks to be on more solid footing from a
technical point of view and, fundamentally, momentum is still positive, although the second derivative, i.e. the growth in growth
rates is declining.
Therefore, absent a collapse in the US economy, an outright sell off in equities appears unlikely - with one major caveat. As
yields are pushing higher, there will be a point where (1) valuations will become stretched compared to rising riskfree rates
and (2) fixed income will become a very attractive asset class again offering attractive forward total returns.
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 10
Although investor sentiment appears somewhat more balanced following the February/March sell off with AAII (American
Association of Individual Investors) bullish sentiment at 33%, down from 60% in early January, positioning still implies a fairly
bullish view.
Thus, client cash in Charles Schwab trading accounts has reached an alltime low at the end of last year while US-wide margin
debt at USD581bn also hit a record-high in December. Both indicators may by now be off their extremes but are still at very
high levels in any historic context.
Exhibit 13: Charles Schwab client cash
Source(s): Investing.com
Concluding with some food for thought and not implying a negative conclusion: Sometimes it helps with investments to invert a
position and see if the thesis still holds (ask what could go wrong rather than where is the upside). Especially in technical
analysis it is an easy way to catch out tea leaf readers from more experienced investors. Inverting and reversing the Dow
Jones index over the past ten years is one such interesting exercise that compares the oversold situation in 2008 to the
overbought state of the market in Q1 of this year. I would not draw any conclusions from that other than to be even more
vigilant in markets.
Exhibit 14: Inverting and reversing the Dow Jones index since 2008
Source(s): Mcoscillator.com
Page 11
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 11
Global economic monitor
Source(s): ACPI, Bloomberg
Nov Dec Jan Feb Mar Apr Trend
Citi Economic Surprise US 59.4 75.7 38.5 32.9 49.8 41.8
Citi Economic Surprise G10 43.5 51.6 34.4 9.9 -1.3 -18.7
Citi Economic Surprise Europe 71.3 49.3 35.6 2.4 -56.8 -77.5
Citi Economic Surprise EM 1.6 -3.3 -1.5 7.9 31.8 3.2
Citi Economic Surprise UK 17.0 29.3 19.9 -0.2 -2.1 -50.5
ISM manufacturing 58.2 59.3 59.1 60.8 59.3 57.3
ISM new orders 61.35 60.95 64.05 64.5 60.7 60.6
Global manufacturing PMI 54.0 54.3 54.6 54.8 53.3 53.8
China manufacturing PMI 51.8 51.6 51.3 50.3 51.5 51.4
Japan manufacturing PMI 53.6 54.0 54.8 54.1 53.1 53.8
US durable goods orders 1.7 2.7 -3.6 3.6 2.6
US initial jobless claims 239 248 234 217 242 211
US Industrial production 0.5 0.5 -0.2 1.0 0.5
Euro Industrial production 1.5 -0.1 -0.6 -0.8
Japan Industrial production 0.7 1.8 -4.5 2.0 1.2
US retail sales 0.8 -0.1 -0.2 -0.1 0.6
Euro retail sales 2.0 -1.1 -0.3 0.3 0.1
Japan retail sales 2.1 3.6 1.5 1.7 1.0
China retail sales 10.2 9.4 10.1
US consumer confidence 128.6 123.1 124.3 130.0 127.0 128.7
Euro consumer confidence 0.0 0.5 1.4 0.1 0.1 0.4
ifo German business expectations 103.9 103.0 101.4 100.3 100.0 98.7
China export trade 11.5 10.9 11.0 44.1 -2.7
South Korea export trade 9.5 8.9 22.2 4.0 6.1 -1.5
German export trade 8.0 10.0 7.4 2.4
China monthly money supply 9.1 8.1 8.6 8.8 8.2
US personal income 0.3 0.4 0.4 0.3 0.3
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MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 12
The Global PMI heatmap
Source(s): ACPI, Bloomberg Co
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.951
.151
.551
.252
.152
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.253
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.952
.951
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.950
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Ch
ina
Man
ufa
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g51
.151
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.751
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.950
.951
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.150
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Ch
ina
Serv
ice
s52
.952
.354
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.753
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.951
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.652
.751
.551
.652
.851
.552
.252
.653
.153
.453
.152
.452
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.151
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.751
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Cze
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ep
ub
lic
Man
ufa
ctu
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g57
.257
.358
.859
.859
.858
.758
.556
.654
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.356
.456
.457
.557
.557
.655
.753
.852
.253
.352
.050
.149
.351
.853
.353
.6
De
velo
pe
d M
arke
tsM
anu
fact
uri
ng
55.1
54.9
55.7
56.3
56.2
55.8
55.2
54.6
54.2
53.9
53.8
54.1
54.1
53.9
54.1
54.1
53.7
52.9
52.6
51.5
51.2
51.4
51.1
50.3
50.5
De
velo
pe
d M
arke
tsSe
rvic
es
54.2
53.4
55.2
54.3
54.1
54.4
54.9
54.5
54.7
54.5
54.5
54.2
54.2
54.1
53.7
54.5
53.9
54.0
53.6
51.8
51.5
51.4
51.6
52.0
52.3
De
velo
pe
d M
arke
tsC
om
po
site
54.4
53.6
55.4
54.9
54.8
54.8
55.0
54.6
54.6
54.4
54.5
54.4
54.4
54.3
54.1
54.6
54.1
54.0
53.7
51.9
51.7
51.6
51.5
51.5
51.9
Egyp
tW
ho
le E
con
om
y50
.149
.249
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Eme
rgin
g M
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tsC
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po
site
52.4
52.3
53.3
53.6
53.0
51.9
51.5
51.9
52.1
51.4
51.5
52.2
52.1
52.5
52.1
51.9
52.0
51.6
51.9
51.2
51.4
51.5
50.1
49.6
50.0
Eme
rgin
g M
arke
tsM
anu
fact
uri
ng
51.3
51.3
51.9
51.9
52.2
51.6
51.2
51.3
51.7
50.9
50.8
50.5
50.9
51.6
51.3
50.8
51.1
50.8
51.1
50.4
50.1
50.3
49.3
49.6
49.6
Eme
rgin
g M
arke
tsSe
rvic
es
52.7
52.5
53.5
53.7
52.8
51.6
51.6
51.5
51.8
51.1
51.7
52.8
52.2
52.2
52.0
52.1
51.7
51.0
51.2
51.2
51.3
51.4
50.8
49.2
50.0
Euro
pe
an U
nio
nC
om
po
site
54.8
54.6
56.6
57.7
57.5
57.0
56.0
56.1
55.3
55.3
55.8
56.3
56.7
56.1
55.6
54.6
54.9
54.1
53.6
52.9
53.0
51.9
53.0
53.1
52.8
Euro
pe
an U
nio
nM
anu
fact
uri
ng
55.9
56.3
58.0
58.9
59.8
59.6
58.0
57.7
57.1
56.2
56.8
56.8
56.7
55.9
55.3
55.2
54.9
53.5
53.4
52.9
51.8
51.4
52.8
51.4
51.5
Euro
pe
an U
nio
nSe
rvic
es
54.3
54.2
55.8
56.8
56.1
55.7
55.1
55.3
54.4
55.0
55.0
55.7
56.3
55.7
55.0
53.9
54.4
54.1
53.3
52.3
52.8
51.5
52.7
53.4
52.9
Euro
zon
eC
om
po
site
55.1
55.2
57.1
58.8
58.1
57.5
56.0
56.7
55.7
55.7
56.3
56.8
56.8
56.4
56.0
54.4
54.4
53.9
53.3
52.6
52.9
53.2
53.1
53.1
53.0
Euro
zon
eM
anu
fact
uri
ng
56.2
56.6
58.6
59.6
60.6
60.1
58.5
58.1
57.4
56.6
57.4
57.0
56.7
56.2
55.4
55.2
54.9
53.7
53.5
52.6
51.7
52.0
52.8
51.5
51.7
Euro
zon
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.650
.152
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.649
.651
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.948
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Euro
zon
eSe
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es
54.7
54.9
56.2
58.0
56.6
56.2
55.0
55.8
54.7
55.4
55.4
56.3
56.4
56.0
55.5
53.7
53.7
53.8
52.8
52.2
52.8
52.9
52.8
53.3
53.1
Euro
zon
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on
stru
ctio
n#N
/A50
.653
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.053
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.352
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.252
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.351
.449
.449
.148
.648
.346
.548
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.5
Fran
ceC
om
po
site
56.9
56.3
57.3
59.6
59.6
60.3
57.4
57.1
55.2
55.6
56.6
56.9
56.6
56.8
55.9
54.1
53.1
51.4
51.6
52.7
51.9
50.1
49.6
50.9
50.2
Fran
ceM
anu
fact
uri
ng
53.8
53.7
55.9
58.4
58.8
57.7
56.1
56.1
55.8
54.9
54.8
53.8
55.1
53.3
52.2
53.6
53.5
51.7
51.8
49.7
48.3
48.6
48.3
48.4
48.0
Fran
ceR
eta
il50
.150
.051
.851
.053
.052
.251
.553
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.156
.353
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.150
.447
.347
.549
.153
.051
.651
.050
.648
.2
Fran
ceSe
rvic
es
57.4
56.9
57.4
59.2
59.1
60.4
57.3
57.0
54.9
56.0
56.9
57.2
56.7
57.5
56.4
54.1
52.9
51.6
51.4
53.3
52.3
50.5
49.9
51.6
50.6
Fran
ceC
on
stru
ctio
n55
.056
.458
.057
.254
.051
.852
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.553
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.352
.353
.552
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.547
.845
.344
.842
.343
.841
.6
Ge
rman
yC
om
po
site
54.6
55.1
57.6
59.0
58.9
57.3
56.6
57.7
55.8
54.7
56.4
57.4
56.7
57.1
56.1
54.8
55.2
55.0
55.1
52.8
53.3
55.3
54.4
54.5
53.6
Ge
rman
yM
anu
fact
uri
ng
58.1
58.2
60.6
61.1
63.3
62.5
60.6
60.6
59.3
58.1
59.6
59.5
58.2
58.3
56.8
56.4
55.6
54.3
55.0
54.3
53.6
53.8
54.5
52.1
51.8
Ge
rman
yR
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il51
.051
.553
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.154
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.853
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.555
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.049
.651
.053
.054
.152
.051
.654
.051
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Ge
rman
ySe
rvic
es
53.0
53.9
55.3
57.3
55.8
54.3
54.7
55.6
53.5
53.1
54.0
55.4
55.4
55.6
54.4
53.4
54.3
55.1
54.2
50.9
51.7
54.4
53.7
55.2
54.5
Ge
rman
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on
stru
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.947
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Gre
ece
Man
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g52
.955
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.155
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.152
.252
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.550
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.648
.246
.747
.746
.649
.348
.348
.649
.250
.448
.750
.448
.449
.7
Ho
ng
Ko
ng
Wh
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Eco
no
my
49.1
50.6
51.7
51.1
51.5
50.7
50.3
51.2
49.7
51.3
51.1
50.5
51.1
49.9
49.6
49.9
50.3
49.5
48.2
49.3
49.0
47.2
45.4
47.2
45.3
Ind
iaC
om
po
site
51.9
50.8
49.7
52.5
53.0
50.3
51.3
51.1
49.0
46.0
52.7
52.5
51.3
52.3
50.7
49.4
47.6
49.1
55.4
52.4
54.6
52.4
51.1
50.9
52.8
Ind
iaM
anu
fact
uri
ng
51.6
51.0
52.1
52.4
54.7
52.6
50.3
51.2
51.2
47.9
50.9
51.6
52.5
52.5
50.7
50.4
49.6
52.3
54.4
52.1
52.6
51.8
51.7
50.7
50.5
Ind
iaSe
rvic
es
51.4
50.3
47.8
51.7
50.9
48.5
51.7
50.7
47.5
45.9
53.1
52.2
50.2
51.5
50.3
48.7
46.8
46.7
54.5
52.0
54.7
51.9
50.3
51.0
53.7
Ind
on
esi
aM
anu
fact
uri
ng
51.6
50.7
51.4
49.9
49.3
50.4
50.1
50.4
50.7
48.6
49.5
50.6
51.2
50.5
49.3
50.4
49.0
49.7
48.7
50.9
50.4
48.4
51.9
50.6
50.9
Ire
lan
dC
om
po
site
57.6
53.7
56.8
59.0
60.2
57.7
56.0
57.6
58.2
57.0
58.0
58.7
58.7
56.9
57.8
59.3
58.4
55.5
54.0
54.8
56.9
56.5
59.2
59.1
58.1
Ire
lan
dM
anu
fact
uri
ng
55.3
54.1
56.2
57.6
59.1
58.1
54.4
55.4
56.1
54.6
56.0
55.9
55.0
53.6
53.8
55.5
55.7
53.7
52.1
51.3
51.7
50.2
53.0
51.5
52.6
Ire
lan
dSe
rvic
es
58.4
56.5
57.2
59.8
60.4
56.0
57.5
58.7
58.4
58.3
57.6
59.5
61.1
59.1
60.6
61.0
59.1
56.0
54.6
56.2
59.7
59.5
61.2
61.7
59.8
Ire
lan
dC
on
stru
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.458
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Ital
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52.9
53.5
56.0
59.0
56.5
56.0
53.9
54.3
55.8
56.2
54.5
55.2
56.8
54.2
54.8
52.8
52.9
53.4
51.1
51.1
51.9
52.2
52.6
50.8
53.1
Ital
yM
anu
fact
uri
ng
53.5
55.1
56.8
59.0
57.4
58.3
57.8
56.3
56.3
55.1
55.2
55.1
56.2
55.7
55.0
53.0
53.2
52.2
50.9
51.0
49.8
51.2
53.5
52.4
53.9
Ital
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.6
Ital
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52.6
52.6
55.0
57.7
55.4
54.7
52.1
53.2
55.1
56.3
53.6
55.1
56.2
52.9
54.1
52.4
52.3
53.3
51.0
50.7
52.3
52.0
51.9
49.8
52.1
Ital
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Jap
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53.1
51.3
52.2
52.8
52.2
52.2
53.4
51.7
51.9
51.8
52.9
53.4
52.6
52.9
52.2
52.3
52.8
52.0
51.3
48.9
49.8
50.1
49.0
49.2
48.9
Jap
anM
anu
fact
uri
ng
53.8
53.1
54.1
54.8
54.0
53.6
52.8
52.9
52.2
52.1
52.4
53.1
52.7
52.4
53.3
52.7
52.4
51.3
51.4
50.4
49.5
49.3
48.1
47.7
48.2
Jap
anSe
rvic
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52.5
50.9
51.7
51.9
51.1
51.2
53.4
51.0
51.6
52.0
53.3
53.0
52.2
52.9
51.3
51.9
52.3
51.8
50.5
48.2
49.6
50.4
49.4
50.4
49.3
Leb
ano
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Me
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Ne
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Po
lan
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anu
fact
uri
ng
53.9
53.7
53.7
54.6
55.0
54.2
53.4
53.7
52.5
52.3
53.1
52.7
54.1
53.5
54.2
54.8
54.3
51.9
50.2
52.2
51.5
50.3
51.8
52.1
51.0
Ru
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Co
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Ru
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Man
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Sou
th A
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Sou
th K
ore
aM
anu
fact
uri
ng
48.4
49.1
50.3
50.7
49.9
51.2
50.2
50.6
49.9
49.1
50.1
49.2
49.4
48.4
49.2
49.0
49.4
48.0
48.0
47.6
48.6
50.1
50.5
50.1
50.0
Spai
nC
om
po
site
55.4
55.8
57.1
56.7
55.4
55.2
55.1
56.4
55.3
56.7
57.7
57.2
57.3
56.8
57.0
54.7
55.5
55.2
54.4
54.1
54.8
53.7
55.7
54.8
55.2
Spai
nM
anu
fact
uri
ng
54.4
54.8
56.0
55.2
55.8
56.1
55.8
54.3
52.4
54.0
54.7
55.4
54.5
53.9
54.8
55.6
55.3
54.5
53.3
52.3
51.0
51.0
52.2
51.8
53.5
Spai
nSe
rvic
es
55.6
56.2
57.3
56.9
54.6
54.4
54.6
56.7
56.0
57.6
58.3
57.3
57.8
57.4
57.7
54.2
55.0
55.1
54.6
54.7
56.0
54.1
56.0
55.4
55.1
Taiw
anM
anu
fact
uri
ng
54.8
55.3
56.0
56.9
56.6
56.3
53.6
54.2
54.3
53.6
53.3
53.1
54.4
56.2
54.5
55.6
56.2
54.7
52.7
52.2
51.8
51.0
50.5
48.5
49.7
Turk
ey
Man
ufa
ctu
rin
g48
.951
.855
.655
.754
.952
.952
.853
.555
.353
.654
.753
.551
.752
.349
.748
.747
.748
.849
.848
.347
.047
.647
.449
.448
.9
Un
ite
d A
rab
Em
irat
es
Wh
ole
Eco
no
my
55.1
54.8
55.1
56.8
57.7
57.0
55.9
55.1
57.3
56.0
55.8
54.3
56.1
56.2
56.0
55.3
55.0
54.2
53.3
54.1
54.7
55.3
53.4
54.0
52.8
Un
ite
d K
ingd
om
Co
mp
osi
te53
.252
.454
.553
.454
.955
.055
.854
.154
.054
.153
.954
.456
.354
.853
.955
.156
.555
.354
.753
.953
.447
.652
.653
.252
.1
Un
ite
d K
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Man
ufa
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rin
g53
.954
.954
.955
.056
.058
.356
.256
.056
.855
.354
.456
.657
.854
.154
.555
.255
.653
.253
.855
.653
.248
.553
.250
.750
.0
Un
ite
d K
ingd
om
Serv
ice
s52
.851
.754
.553
.054
.253
.855
.653
.653
.253
.853
.453
.855
.855
.053
.354
.556
.255
.254
.552
.652
.947
.452
.353
.552
.3
Un
ite
d K
ingd
om
Co
nst
ruct
ion
52.5
47.0
51.4
50.2
52.2
53.1
50.8
48.1
51.1
51.9
54.8
56.0
53.1
52.2
52.5
52.2
54.2
52.8
52.6
52.3
49.2
45.9
46.0
51.2
52.0
Un
ite
d S
tate
sM
anu
fact
uri
ng
56.5
55.6
55.3
55.5
55.1
53.9
54.6
53.1
52.8
53.3
52.0
52.7
52.8
53.3
54.2
55.0
54.3
54.1
53.4
51.5
52.0
52.9
51.3
50.7
50.8
Un
ite
d S
tate
sSe
rvic
es
54.6
54.0
55.9
53.3
53.7
54.5
55.3
55.3
56.0
54.7
54.2
53.6
53.1
52.8
53.8
55.6
53.9
54.6
54.8
52.3
51.0
51.4
51.4
51.3
52.8
Un
ite
d S
tate
sC
om
po
site
54.9
54.2
55.8
53.8
54.1
54.5
55.2
54.8
55.3
54.6
53.9
53.6
53.2
53.0
54.1
55.8
54.1
54.9
54.9
52.3
51.5
51.8
51.2
50.9
52.4
Vie
tnam
Man
ufa
ctu
rin
g52
.751
.653
.553
.452
.551
.451
.653
.351
.851
.752
.551
.654
.154
.654
.251
.952
.454
.051
.752
.952
.251
.952
.652
.752
.3
Wo
rld
Co
mp
osi
te53
.853
.354
.854
.654
.354
.054
.053
.853
.953
.553
.653
.853
.753
.853
.553
.853
.553
.353
.151
.851
.651
.651
.151
.051
.4
Wo
rld
Man
ufa
ctu
rin
g53
.553
.354
.154
.454
.554
.053
.453
.253
.152
.752
.652
.652
.752
.952
.952
.752
.652
.052
.051
.150
.851
.050
.450
.150
.2
Wo
rld
Serv
ice
s53
.853
.254
.854
.153
.853
.754
.153
.854
.053
.753
.853
.953
.753
.753
.353
.953
.453
.353
.051
.751
.551
.451
.451
.351
.7
The table shows monthly PMI statistics across countries and different sectors per country for the past two years. The latest data is next to the country/sector name at the bottom of the page.
Brazil recovering
Italy’s permanent recession
Improving picture in the US
EM recovery
Page 13
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
___________________________________________________________________________________________
ACPI Investment Managers Private & Confidential 13
The World in Numbers
Source(s): ACPI, Bloomberg
Date PMI CPI (%) Disc rate % Ind Prodyoy% Exports ($M) Imports ($M) Trade bal ($M) M2 ($bn) M2 mom% Unempl % Date GDP yoy%
31/10/2017 65.4 2 1.25 2.65 136,348 212,480 -76,132 13,755 4.1 30/06/2017 2.2
30/11/2017 65.6 2.20 1.25 3.41 135,837 208,953 -73,116 13,784 0.2% 4.1 30/09/2017 2.3
31/12/2017 67.8 2.1 1.5 2.91 136,661 201,912 -65,251 13,834 0.4% 4.1 31/12/2017 2.6
31/01/2018 65.7 2.1 1.5 2.95 125,663 205,305 -79,642 13,841 0.0% 4.1 31/03/2018 2.9
28/02/2018 61.9 2.2 1.5 4.37 128,402 189,041 -60,639 13,864 0.2% 4.1
31/03/2018 57.4 2.4 1.75 4.33 149,299 209,658 -60,359 13,927 0.5% 4.1
30/04/2018 57.6 1.75 3.9
Date PMI CPI (%) Disc rate % Ind Prodyoy% Exports ($bn) Imports ($bn) Trade bal ($bn) M2 (RMBbn) M2 mom% Date GDP yoy%
31/10/2017 51.6 1.9 1.50 6.2 187.8 150.92 36.9 165,343 30/06/2017 6.9
30/11/2017 51.8 1.7 1.50 6.1 215.84 177.25 38.6 167,001 1.0% 30/09/2017 6.8
31/12/2017 51.6 1.8 1.50 6.2 231.68 177.39 54.3 167,677 0.4% 31/12/2017 6.8
31/01/2018 51.3 1.5 1.50 6.0 200.07 180.14 19.9 172,081 2.6% 31/03/2018 6.8
28/02/2018 50.3 2.9 1.50 171.08 137.63 33.5 172,907 0.5%
31/03/2018 51.5 2.1 1.50 174.12 179.1 -5.0 173,986 0.6%
30/04/2018 51.4 1.50
Date PMI CPI (%) Disc rate % Ind Prodyoy% Exports (€bn) Imports (€bn) Trade bal (€bn) M2 EZ (€bn) M2 EZ mom% Unempl % Date GDP yoy%
31/10/2017 60.6 1.6 0.00 2.3 107.1 87.4 19.7 11,114,759 5.6 30/06/2017 2.3
30/11/2017 62.5 1.8 0.00 5.7 111.5 88.9 22.6 11,175,876 0.5% 5.5 30/09/2017 2.7
31/12/2017 63.3 1.7 0.00 6.3 111.5 89.7 21.8 11,234,787 0.5% 5.5 31/12/2017 2.9
31/01/2018 61.1 1.6 0.00 6.3 111 89.5 21.5 11,221,482 -0.1% 5.4
28/02/2018 60.6 1.4 0.00 2.6 107.5 88.3 19.2 11,218,237 0.0% 5.4
31/03/2018 58.2 1.6 0.00 0.0 11,280,600 0.6% 5.3
30/04/2018 58.1 1.6 0.00 5.3
Date PMI CPI (%) Disc rate % Ind Prodyoy% Exports,GBPM Imports,GBPM Trade bal (GBPM) M2 (GBPM) M2 mom% Unempl % Date GDP yoy%
31/10/2017 56.2 3 0.25 4.0 52,765 54,915 -2,150 1,675,456 4.3 30/06/2017 1.9
30/11/2017 58.3 3.1 0.50 2.1 52,541 55,585 -3,044 1,682,733 0.4% 4.3 30/09/2017 1.8
31/12/2017 56 3 0.50 -0.4 52,830 55,275 -2,445 1,689,579 0.4% 4.4 31/12/2017 1.4
31/01/2018 55 3 0.50 1.2 53,163 56,112 -2,949 1,679,019 -0.6% 4.3 31/03/2018 1.2
28/02/2018 54.9 2.7 0.50 2.2 52,447 53,412 -965 1,683,089 0.2% 4.2
31/03/2018 54.9 2.5 0.50 1,700,221 1.0%
30/04/2018 53.9 0.50
Date CPI (%) Disc rate % Ind Prodyoy% Exports,JPYbn Imports,JPYbn Trade bal (JPYbn) M2 (JPY TRN) M2 mom% Unempl % Date GDP yoy%
31/10/2017 0.2 5.7 6,693 6,414 279 981 2.8 30/06/2017 1.5
30/11/2017 0.6 3.6 6,920 6,815 105 988 0.6% 2.7 30/09/2017 1.9
31/12/2017 1.0 4.5 7,304 6,948 356 991 0.3% 2.7 31/12/2017 2.0
31/01/2018 1.4 2.9 6,086 7,035 -948 992 0.1% 2.4
28/02/2018 1.5 1.6 6,463 6,463 0 987 -0.5% 2.5
31/03/2018 1.1 2.2 7,383 6,586 797 991 0.4% 2.5
00/01/1900 4.5
Date CPI (%) Disc rate % Ind Prodyoy% Exports ($M) Imports ($M) Trade bal ($M) M3 (INR 10M) M2 mom% Date GDP yoy%
31/10/2017 3.6 6.00 1.8 23,098 37,117 -14,019 13,167,137 30/06/2017 5.6
30/11/2017 4.9 6.00 8.5 26,196 40,025 -13,829 13,198,638 0.2% 30/09/2017 6.2
29/12/2017 5.2 6.00 7.1 27,030 41,910 -14,880 13,272,377 0.6% 31/12/2017 6.7
31/01/2018 5.1 6.00 7.4 24,384 40,682 -16,298 13,413,297 1.1%
28/02/2018 4.4 6.00 7.1 25,834 37,814 -11,979 13,528,643 0.9%
30/03/2018 4.3 6.00 29,109 42,801 -13,692 14,014,482 3.6%
30/04/2018 6.00 13,962,096 -0.4%
INDIA
US
CHINA
GERMANY
UK
JAPAN
Page 14
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
___________________________________________________________________________________________
ACPI Investment Managers Private & Confidential 14
Performance of different asset classes
Source(s): ACPI, Bloomberg
EQUITIES Currency APRIL 2018 2017 2016 2015 2014 2013 2012 2011
MSCI World USD 2,086.5 1.0% -0.8% 20.1% 5.3% -2.7% 2.9% 24.1% 13.2% -7.6%
MSCI World (EUR hedged) EUR 155.8 1.6% -1.7% 14.6% 5.6% -0.2% 7.4% 25.4% 12.0% -7.8%
MSCI World (GBP hedged) GBP 809.3 1.7% -1.4% 15.5% 6.0% -0.1% 7.9% 26.5% 12.6% -7.9%
MSCI World (USD hedged) USD 547.0 1.8% -0.7% 16.9% 7.2% 0.1% 7.6% 26.1% 13.1% -23.3%
MSCI World local Local 583.9 1.7% -0.7% 17.5% 6.8% -0.7% 7.2% 22.9% 13.2% -8.5%
US (S&P500) USD 2,648.1 0.3% -1.0% 19.4% 9.5% -0.7% 11.4% 29.6% 13.4% 0.0%
Europe (Stoxx 600) EUR 385.3 3.9% -1.0% 7.7% -1.2% 6.8% 4.4% 17.4% 14.4% -11.3%
Eurozone (Euro Stoxx 50) EUR 3,536.5 5.2% 0.9% 6.5% 0.7% 3.8% 1.2% 17.9% 13.8% -17.0%
Germany (DAX30) EUR 12,612.1 4.3% -2.4% 12.5% 6.9% 9.6% 2.7% 25.5% 29.0% -14.7%
UK (FTSE 100) GBP 7,509.3 6.4% -2.3% 7.6% 14.4% -4.9% -2.7% 14.4% 5.8% -5.5%
France (CAC40) EUR 5,520.5 6.8% 3.9% 9.3% 4.9% 8.5% -0.5% 18.0% 15.2% -16.9%
Greece (ASE) EUR 858.2 10.0% 7.0% 24.7% 1.9% -23.6% -28.9% 28.0% 33.4% -51.9%
Spain (IBEX) EUR 9,980.6 4.0% -0.6% 7.4% -2.0% -7.2% 3.7% 21.4% -4.7% -13.1%
Italy (MIB) EUR 23,979.4 7.0% 9.7% 13.6% -10.2% 12.7% 0.2% 16.6% 7.8% -25.2%
Japan (Nikkei 225) JPY 22,467.9 4.7% -1.3% 19.1% 0.4% 9.1% 7.1% 56.7% 22.9% -17.9%
MSCI Emerging Markets USD 1,164.4 -0.6% 0.5% 34.3% 8.6% -17.0% -4.6% -5.0% 15.1% -20.4%
MSCI Emerging Markets local Local 61,751.3 1.1% 1.4% 27.8% 7.1% -8.0% 2.5% 0.9% 13.9% -14.9%
MSCI Asia ex Japan USD 720.9 0.6% 1.0% 38.7% 2.9% -11.3% 2.2% 0.7% 19.4% -19.2%
MSCI Eastern Europe USD 163.8 -4.9% -1.1% 12.9% 33.0% -8.1% -40.0% -2.9% 13.2% -23.3%
MSCI Latin America USD 2,987.5 -1.5% 5.6% 20.8% 27.9% -32.9% -14.8% -15.7% 5.4% -21.9%
Russia (MICEX) RUB 2,307.0 1.6% 9.4% -5.5% 26.8% 26.1% -7.1% 2.0% 5.2% -16.9%
India (Sensex) INR 35,160.4 6.6% 3.2% 27.9% 1.9% -5.0% 29.9% 9.0% 25.7% -24.6%
Brasil (Bovespa) BRL 86,115.5 0.9% 12.7% 26.9% 38.9% -13.3% -2.9% -15.5% 7.4% -18.1%
Hong Kong (Hang Seng) HKD 30,808.5 2.4% 3.0% 36.0% 0.4% -7.2% 1.3% 2.9% 22.9% -20.0%
China (Shanghai Comp) CNY 3,082.2 -2.7% -6.8% 6.6% -12.3% 9.4% 52.9% -6.8% 3.2% -21.7%
South Korea (Kospi) KRW 2,515.4 2.8% 1.9% 21.8% 3.3% 2.4% -4.8% 0.7% 9.4% -11.0%
Israel (TA 25) ILS 1,465.2 2.0% -3.0% 2.7% -3.8% 4.4% 10.2% 12.1% 9.2% -18.2%
South Africa (Top 40) ZAR 51,419.2 5.4% -2.1% 19.7% -4.1% 4.2% 6.0% 19.2% 22.2% -0.6%
FIXED INCOME APRIL 2018 2017 2016 2015 2014 2013 2012 2011
Citigroup WorldBig USD 222.8 -1.5% -0.3% 7.4% 1.9% -3.2% 0.8% 24.1% 13.2% -7.6%
Citigroup WorldBig local Local 221.5 -0.5% -0.9% 2.1% 3.3% 0.9% 7.9% -0.1% 5.6% 5.7%
Citigroup WorldBig (EUR hedged) EUR 219.0 -0.6% -1.3% 1.0% 2.4% 0.6% 7.8% -0.2% 5.5% 6.2%
Citigroup WorldBig (GBP hedged) GBP 271.3 -0.5% -1.0% 1.9% 3.6% 1.3% 8.2% 0.1% 5.8% 5.9%
Citigroup WorldBig (USD hedged) USD 241.5 -0.4% -0.5% 2.9% 3.9% 0.9% 7.8% -0.1% 5.6% 5.5%
World government bonds (Citi) USD 955.5 -1.9% 0.6% 7.5% 1.6% -3.6% -0.5% -4.0% 1.7% 6.4%
US Treasuries, total return USD 220.1 -0.8% -2.0% 2.5% 1.1% 0.8% 6.1% -3.4% 2.1% 9.9%
US 10-year yield USD 2.95% 0.21 0.55 -0.04 0.17 0.10 -0.86 1.27 -0.12 -1.42
US 10-year bond USD 119.6 -1.3% -3.6% -0.2% -1.3% -0.7% 3.0% -7.3% 1.3% 8.9%
US 5y/5y forward inflation expectation USD 2.27% 0.19 0.27 -0.05 0.24 -0.33 -0.51 -0.32 0.58 -0.39
Eurozone government debt EUR 235.3 -0.3% 1.0% 0.1% 3.3% 1.6% 13.1% 2.2% 11.0% 3.4%
Eurozone corporate bonds EUR 225.7 0.0% -0.4% 2.4% 4.7% -0.7% 8.2% 2.2% 13.6% 1.7%
EU high yield (BofAML) USD 304.9 0.6% 0.1% 6.7% 9.1% 0.8% -7.4% 15.0% 29.2% -5.6%
Germany 10-year yield EUR 0.56% 0.06 0.13 0.22 -0.42 0.09 -1.39 0.61 -0.51 -1.14
Germany 10-year bond EUR 158.7 -0.4% -1.8% -1.5% 3.9% 1.3% 12.0% -4.4% 4.8% 11.0%
UK 10-year yield GBP 1.42% 0.07 0.23 -0.05 -0.72 0.20 -1.27 1.19 -0.15 -1.42
Japan 10-year yield JPY 0.06% 0.01 0.01 0.00 -0.22 -0.06 -0.41 -0.05 -0.20 -0.14
China 10-year yield CNY 3.65% -0.10 -0.25 0.84 0.20 -0.79 -0.97 1.03 0.15 -0.47
India 10-year yield INR 7.77% 0.37 0.44 0.81 -1.25 -0.10 -0.97 0.78 -0.52 0.65
Russia 10-year yield RUB 7.16% 0.22 -0.27 -0.86 -1.10 -4.13 5.98 0.89 -1.65 0.61
Loans, total return (S&P LSTA) USD 2,852.9 0.4% 1.9% 4.1% 10.2% -0.7% 1.6% 5.3% 9.7% 1.5%
US High yield (BofAML) USD 1,259.0 0.7% -0.3% 7.5% 17.5% -4.6% 2.5% 7.4% 15.6% 4.4%
US investment grade (BofAML) USD 2,821.5 -0.9% -3.0% 6.5% 6.0% -0.6% 7.5% -1.5% 10.4% 7.5%
US mortgages (BofAML) USD 2,037.8 -0.5% -1.7% 2.4% 1.7% 1.5% 6.1% -1.4% 2.6% 6.1%
US municipals (BofAML) USD 546.8 -0.4% -1.5% 5.4% 0.4% 3.6% 9.8% -2.9% 7.3% 11.2%
EM hard-currency debt (JPM EMBI+) USD 806.5 -1.5% -3.5% 8.3% 9.6% 1.8% 6.2% -8.3% 18.0% 9.2%
EM external government debt (BofAML) USD 1,129.8 -1.4% -2.7% 11.5% 7.6% -1.0% 5.2% -3.3% 17.6% 5.8%
EM investment grade (BofAML) USD 366.1 -0.9% -2.0% 7.3% 5.5% -1.0% 3.9% -1.3% 13.2% 5.6%
Emerging market spreads USD 209.4 5.22 3.73 -81.21 -218.44 81.55 113.54 43.24
US Investment-grade spreads USD 98.9 -0.98 7.41 -32.15 -44.55 49.98 22.95 -31.46
US high-yield spreads USD 340.7 -20.04 -34.43 -54.61 -289.20 187.09 180.41 -74.78
CURRENCIES APRIL 2018 2017 2016 2015 2014 2013 2012 2011
Dollar index 91.8 2.1% -0.3% -9.9% 3.6% 9.3% 12.8% 0.3% -0.5% 1.5%
Euro 1.2 -2.0% 0.6% 14.1% -3.2% -10.2% -12.0% 4.2% 1.8% -3.2%
Pound Sterling 1.4 -1.8% 1.9% 9.5% -16.3% -5.4% -5.9% 1.9% 4.6% -0.4%
Swiss Franc 1.0 -3.7% -1.6% 4.5% -1.6% -0.8% -10.2% 2.5% 2.6% -0.4%
Japanese Yen 109.3 -2.8% 3.1% 3.8% 2.8% -0.5% -12.1% -17.6% -11.3% 5.5%
Renminbi 6.3 -0.7% 2.8% 6.7% -6.6% -4.4% -2.4% 2.9% 1.1% 4.8%
Won 1,068.1 -0.9% -0.3% 13.2% -2.6% -7.0% -3.8% 1.0% 9.1% -3.2%
Brasilian Real 3.5 -5.7% -5.5% -1.8% 21.7% -33.0% -11.1% -13.2% -9.1% -11.0%
Indian Rupee 66.7 -2.1% -4.2% 6.3% -2.6% -4.5% -2.0% -11.0% -3.1% -15.8%
USD real effective exchange rate (JPM) 108.7 1.5% -1.5% -6.3% 4.2% 7.9% 7.7% 1.4% -2.7% 1.7%
EUR real effective exchange rate (JPM) 94.5 -1.0% -0.3% 5.4% -1.2% -4.9% -3.8% 4.4% -1.9% -1.2%
JPY real effective exchange rate (JPM) 73.4 -1.6% 1.5% -3.1% 3.6% 4.9% -7.1% -17.5% -15.1% 2.5%
COMMODITIES APRIL 2018 2017 2016 2015 2014 2013 2012 2011
Global commodities, total return (S&P GSCI) USD 2,744.2 5.0% 7.3% 5.8% 11.4% -32.9% -33.1% -1.2% 0.1% -1.2%
Agriculture, spot return USD 308.6 4.5% 9.4% -3.0% 2.6% -12.1% -8.3% -22.1% 3.9% -14.9%
Energy, total return USD 517.9 6.5% 12.0% 6.4% 18.1% -41.5% -44.1% 5.1% -1.4% 4.9%
Crude oil USD 556.3 5.8% 14.8% 4.1% 8.0% -45.3% -42.6% 6.0% -11.5% -1.3%
Industrial metals, total return USD 1,403.0 4.3% -3.2% 29.1% 17.6% -24.5% -7.4% -12.9% 1.4% -22.3%
Copper USD 4,104.9 1.3% -6.3% 29.4% 17.3% -24.9% -12.7% -7.9% 4.3% -21.5%
Livestock, total return USD 1,768.5 1.0% -8.9% 8.4% -7.3% -18.3% 14.2% -3.6% -4.0% -1.2%
Precious metals USD 1,576.2 -0.4% -0.1% 12.0% 8.4% -11.1% -4.1% -29.8% 6.2% 6.6%
Gold, total return USD 698.8 -0.5% 0.5% 12.8% 7.7% -10.9% -1.7% -28.7% 6.1% 9.6%
REAL ESTATE APRIL 2018 2017 2016 2015 2014 2013 2012 2011
All Equity REITS total returns (FTSE NAREIT) USD 16,226.8 0.5% -6.2% 8.7% 8.6% 2.8% 28.0% 2.9% 19.7% 8.3%
FTSE EPRA NAREIT developed markets, total return USD 4,867.1 2.0% -2.4% 11.4% 5.0% 0.1% 15.9% 4.4% 28.7% -5.8%
FTSE EPRA NAREIT emerging markets USD 2,602.0 1.4% 2.6% 28.8% 0.2% 2.5% 15.1% -20.0% 36.1% -28.9%
New York home prices USD 197.2 0.0% 0.7% 5.7% 2.8% 3.7% 2.8% 6.2% -0.3% -3.3%
Greater London house price (£) GBP 628,039.0 -0.6% 3.0% -1.7% -0.1% 9.9% 11.7% 10.6% 6.8% 6.4%
German house prices EUR 123.5 0.0% 0.7% 5.7% 8.7% 1.7% 6.6% 3.5% 5.0% 8.4%
Moscow prop prices (US$/sqm) USD 2,817.0 -3.4% -0.4% 4.8% 3.6% -32.7% -24.8% -2.6% 6.0% 9.5%
Beijing property prices (RMB/sqm) RMB 41,068.0 0.0% -22.8% 35.4% 32.6% 14.7% -3.2% 30.7% -7.9% 7.9%
HEDGE FUNDS APRIL 2018 2017 2016 2015 2014 2013 2012 2011
Global hedge funds USD 1,263.8 0.1% -0.9% 6.0% 2.5% -3.6% -0.6% 6.7% 3.5% -8.9%
Equity hedge funds USD 1,278.6 -0.6% 0.6% 10.0% 0.1% -2.3% 1.4% 11.1% 4.8% -19.1%
Event-driven hedge funds USD 1,592.5 0.4% -4.4% 6.5% 11.1% -6.9% -4.1% 13.9% 6.0% -4.9%
CTA funds USD 1,145.5 0.5% -1.6% 2.5% -2.9% -2.0% 5.2% -1.8% -1.0% -4.9%
Credit hedge funds USD 2,045.5 0.2% -0.2% 3.9% 5.0% -4.4% -1.8% 6.9% 7.7% -3.6%
Activist hedge funds USD 2,502.8 0.0% 2.3% 6.1% 9.1% 0.2% 8.5% 19.2% 9.3% -16.9%
Page 15
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
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ACPI Investment Managers Private & Confidential 15
Performance and valuations of international equity markets
Year to Market Rolling 1-yr Rolling 2-yr Rolling 3-yr EPS growth
Country date Cap (USDbn)* change change change 2018E 2019E 2019E 2018E 2019E
WORLD
All Country MSCI MXWD Index -0.8% 56,272 10.8% 28.6% 17.4% 15.4 14.1 9.8% 2.5% 2.7%
Developed World MXWO Index -0.7% 45,791 10.2% 27.2% 18.1% 16.0 14.6 9.5% 2.5% 2.7%
Emerging World MXEF Index -1.9% 10,481 16.1% 41.1% 10.9% 12.2 11.0 11.4% 2.8% 3.1%
AMERICAS
US (S&P500) SPX Index 0.0% 23,391 11.4% 29.9% 28.0% 16.9 15.4 9.9% 2.0% 2.2%
US (Dow Jones Industrial) INDU Index -1.5% 6,640 15.9% 37.3% 35.9% 16.2 14.8 8.9% 2.3% 2.5%
US mid/small cap RTY Index 2.8% 2,502 13.0% 41.6% 28.8% 25.9 20.6 26.1% 1.2% 1.2%
Canada SPTSX Index -2.5% 1,863 1.5% 15.4% 4.8% 15.6 14.0 11.8% 3.0% 3.2%
Mexico MEXBOL Index -5.8% 315 -6.1% 2.8% 3.8% 16.2 14.0 16.4% 2.5% 2.7%
Argentina MERVAL Index -8.5% 134 30.0% 104.5% 126.9% 8.6 8.3 3.2% 1.6%
Brazil IBOV Index 8.3% 768 25.9% 59.9% 45.3% 12.5 11.1 12.8% 3.5% 4.2%
EUROPE
Europe SXXP Index 0.1% 12,510 -1.3% 17.4% 0.1% 15.0 13.9 8.6% 3.5% 3.7%
Germany DAX Index 0.2% 1,428 1.8% 31.2% 13.5% 13.5 12.4 8.8% 3.1% 3.3%
France CAC Index 4.1% 1,898 1.8% 28.6% 11.4% 15.1 13.8 9.2% 3.2% 3.5%
UK UKX Index -1.6% 2,871 3.7% 23.5% 9.9% 14.0 13.3 5.7% 4.2% 4.4%
Spain IBEX Index 1.0% 767 -8.9% 16.5% -9.3% 13.3 12.3 8.2% 4.0% 4.3%
Italy FTSEMIB Index 12.3% 666 14.2% 37.6% 7.5% 13.4 11.9 13.0% 3.5% 4.0%
Switzerland SMI Index -4.3% 1,093 -0.4% 16.1% 1.2% 15.6 14.2 9.9% 3.6% 3.9%
Norway OBX Index 8.4% 254 26.5% 50.6% 38.9% 15.9 13.9 14.2% 3.9% 4.3%
Sweden OMX Index 1.3% 569 -2.7% 22.1% 0.6% 15.7 14.6 7.5% 4.3% 4.4%
Austria ATX Index 1.9% 118 13.6% 55.6% 33.2% 12.9 11.9 8.5% 3.2% 3.6%
Greece ASE Index 1.0% 64 7.5% 33.9% -3.7% 17.6 15.6 12.5% 2.2% 2.5%
EMERGING EUROPE
Hungary BUX Index -4.7% 30 14.2% 43.7% 65.2% 10.6 10.1 4.3% 2.8% 3.1%
Kazakhstan KZKAK Index 14.4% 20 60.5% 160.2% 190.4%
Ukraine PFTS Index 50.4% 2 72.2% 115.5% 28.7% 8.1
Russia RTSI$ Index -0.1% 544 6.3% 26.5% 8.8% 6.3 6.2 1.4% 5.9% 6.6%
Poland WIG Index -8.1% 381 -5.2% 25.6% 3.0% 11.3 10.4 8.4% 3.1% 3.5%
Czech Rep PX Index 2.9% 60 10.2% 27.8% 7.9% 13.9 13.6 2.8% 4.6% 4.7%
Turkey XU100 Index -12.5% 160 7.4% 28.7% 22.2% 7.1 6.2 13.0% 4.7% 5.3%
MIDDLE EAST & AFRICA
South Africa TOP40 Index -2.6% 706 8.8% 13.4% 8.4% 16.0 14.5 10.1% 3.1% 3.2%
Egypt Hermes Index 17.2% 45.7% 144.8% 113.1% 12.8 11.2 14.0% 2.6% 3.2%
Namibia FTN098 Index 7.0% 176 32.8% 45.9% 18.7% 12.4 12.1 2.7% 4.0% 4.2%
Nigeria NGSEINDX Index 7.8% 42 57.2% 60.4% 19.9% 15.1%
Israel TA-25 Index -2.3% 3.6% 4.5% -9.7% 13.2 11.7 12.0% 1.7% 2.0%
Saudi Arabia SASEIDX Index 12.3% 18.4% 21.9% -16.5% 14.9 13.2 13.3% 3.3% 3.7%
Qatar DSM Index 5.4% -8.6% -7.8% -26.9% 12.4 11.1 11.3% 4.6% 4.8%
Dubai DFMGI Index -12.1% -12.4% -10.4% -27.8% 7.8 7.0 11.6% 5.5% 5.7%
ASIA
Asia MXAPEXA Index 0.1% 3,585 22.4% 62.9% 26.6% 12.4 11.2 10.6% 2.9% 3.1%
Japan TPX Index -2.4% 6,135 11.8% 36.6% 11.7% 14.1 12.8 9.8% 2.1% 2.2%
Japan NKY Index -1.3% 3,606 12.9% 39.5% 15.9% 16.3 14.3 14.0% 1.9% 2.1%
Hong Kong HSI Index 0.3% 2,540 22.0% 49.2% 8.8% 11.6 10.5 10.4% 3.6% 3.8%
China domestic shashr Index -5.2% 4,990 1.9% 7.8% -25.4% 12.4 10.9 13.5% 2.4% 2.7%
China offshore HSCEI Index 2.2% 1,633 19.9% 41.3% -14.8% 7.9 7.1 10.4% 4.2% 4.6%
South Korea KOSPI Index -0.2% 1,515 9.8% 24.5% 17.7% 2.9% 3.0%
New Zealand NZSE Index 1.1% 87 12.0% 16.4% 34.6% 22.4 18.3 22.6% 3.7% 4.2%
Australia AS30 Index 0.1% 1,444 4.7% 15.2% 9.6% 16.7 14.7 13.5% 4.2% 4.3%
Pakistan KSE100 Index 9.7% 69 -11.0% 23.4% 31.5% 9.8 8.4 16.0% 5.6% 6.2%
Thailand SET50 Index 3.6% 382 18.1% 33.4% 17.5% 16.0 14.9 7.4% 2.9% 3.1%
Indonesia JCI Index -7.4% 481 3.1% 22.0% 13.6% 15.0 13.4 12.1% 2.2% 2.5%
India NIFTY Index 1.8% 1,170 15.0% 38.6% 30.8% 17.9 15.1 18.3% 1.6% 1.8%
Singapore FSSTI Index 3.8% 452 9.1% 29.4% 2.3% 14.0 12.9 8.6% 3.7% 3.9%
Malaysia FBMKLCI Index 1.7% 289 3.4% 10.8% 1.1% 16.3 15.2 7.4% 3.4% 3.5%
Philippines PCOMP Index -12.0% 187 -5.4% 7.7% -3.0% 16.8 14.9 12.9% 1.7% 1.9%
Vietnam VNINDEX Index 7.9% 126 47.8% 75.1% 91.6% 18.1 15.3 17.9% 1.4% 1.4%
Source(s): ACPI, Bloomberg Data as of: 30-Apr-2018 * Market cap for the main index
PER Dividend yield
Page 16
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
___________________________________________________________________________________________
ACPI Investment Managers Private & Confidential 16
Three-month outlook
Highly indebted major World economies are characterised by steady GDP growth, low inflation and re-synchronising growth patterns, whilst the lack of fiscal stimulus puts the burden on central banks, which will keep interest rates relatively low for a long time to come.
Weight
Cash We are slightly overweight cash from reductions in fixed income. ➔
Eq
uit
ies
US Valuations are high but US equities benefit from improving growth. Rising wages and a stronger dollar could provide EPS
headwinds. Positive sentiment was the missing ingredient to push stocks closer to the tops in this cycle.
Europe Earnings growth continues to be robust and the economic backdrop of the eurozone is strong. Interest rates will stay low for the
foreseeable future although support from QE will diminish over time.
Japan Japanese equity markets are still amongst the cheapest globally and for as long as yields remain anchored, the market remains
attractive, although currency volatility induces substantial equity volatility in the country.
China A shares are attractive as the country is undergoing a major transition. The domestic consumer is becoming stronger and
savings are rising, despite tightening and rebalancing measures.
EM Earnings growth is solid and valuations reasonable although political risks are present and the outlook for a stronger dollar is
not priced into EM equities. ➔
Central
Banks
Aggregate central bank balance sheet growth will consolidate on a global level, leading to less liquidity provision and, hence,
reduced support for asset markets. Central banks will gradually continue/begin to tighten. ➔
Fix
ed
In
co
me DM govt
In the medium term, yields can rise further as expectations for growth and inflation improve. As sovereign bonds are expensive,
downside risks dominate and the asset class is only suitable as a hedging instrument.
EM govt Dollar bonds of countries with low external debt levels and low/no trade and budget deficits are interesting. Should the dollar
strengthen sustainably, risks within EM would increase. ➔
DM credit Spreads have been tightening substantially, leaving little room for further compression. Spreads in the US and the UK are more
attractive than in the eurozone where rates are extremely low but likely to rise. ➔
EM credit We avoid issuers with substantial hard-currency debt relative to the underlying revenue mix. We would stress-test balance
sheets against any EM FX deterioration. Spreads for fundamentally strong issuers in hard currency are attractive. ➔
Alt FI We like alternative areas of fixed income such as peer-to-peer lending (P2P) and structured credit. P2P lending offers
diversified and uncorrelated high single-digit return streams whilst returns in structured credit are still attractive. ➔
Cu
rren
cie
s
USD GDP growth is solid, inflation is still under control and the Fed is set to continue to raise rates and reduce its balance sheet.
Also, the tax reform has been accomplished, all of which is bullish for the dollar.
EUR The euro performed strongly last year and is expected to consolidate. Further tapering by the ECB would be bullish for the euro
and eurozone assets. Short term overbought.
JPY The BoJ has turned less aggressive recently with regards to providing additional monetary stimulus. The market is trying to
find a new direction for the yen. Inflation is positive but stable and GDP growth is also robust, which is positive for the currency. ➔
EM The weaker dollar has provided tailwinds for EM currencies. We prefer commodity exporters over commodity importers. We like
RUB, MXN, INR and avoid TRY. A sustainable dollar recovery could pose a threat to EM FX. ➔
GBP The GBP cheapened substantially because of the Brexit vote. Due to the long timeline of the Brexit process and unpredictable
political noise, uncertainty will continue, adding a substantial risk premium to the currency. Rangebound. ➔
Co
mm
od
itie
s
Oil The oil market is increasingly rebalancing as inventories are declining and shale production is only growing slowly while
demand is rising steadily.
Metals Industrial metals have been supported by stronger-than-expected growth in Asia in general and China in particular where the
government managed smoothly to rebalance the economy, successfully addressing major areas of concern. ➔
General We believe that after its five-year (2011-2015) streak of high negative returns, the commodity complex in general could become
more attractive again, especially energy and agricultural commodities but also precious metals as a hedge against tail risks.
Page 17
MONTHLY VIEWPOINT
From the Chief Investment Officer Marco E Pabst
15th May 2018
___________________________________________________________________________________________
ACPI Investment Managers Private & Confidential 17
DISCLAIMER
This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. While
based on information believed to be reliable, no guarantee is given that it is accurate or complete. Any investments referred to may not be suitable for the specific
investment objectives, financial situation or individual needs of recipients. Reliance should not be placed on the views and information expressed herein when making
any individual investment and/or strategic decisions.
You should also be aware that the value of investments and any income from them can go down as well as up, and you may not receive back the amount you originally
invested. There can be no assurances that appreciation in value of investments will occur, or that currency fluctuations will not affect the outcomes of any investment
adversely.
Past performance of the index or individual funds is not a guide to future performance.
Certain funds invest in emerging markets which by their nature are higher risk and potentially more volatile than those inherent in established markets.
This material is for the use of intended recipients only and the contents may not be reproduced, redistributed, or copied in whole or in part for any purpose without the
consent of the issuer of this document.
Where foreign securities are included in collective investment schemes, there may be additional risks that arise because of events in different jurisdictions. These may
include but are not limited to; potential constraints on liquidity and the repatriation of funds, macroeconomic risks, political risks, foreign exchange risks, tax risks,
settlement risks and potential limitations on the availability of market information.
Issued by ACPI Investment Ltd (Registered in England - Number 03781549, at 37-43 Sackville Street, London, W1S 3EH), which is authorised and regulated by the
Financial Conduct Authority (Register Number 192403). Details can be found on the following link www.fca.org.uk/register.
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