Friday, 18 October 2013 20:00

Global Investment Update - October 2013

Hamish Douglass (CEO Magellan Financial Group) talks with Mark Draper (Adviser, GEM Capital) about his views on the current state of global financial markets.

In particular Hamish discusses:

1. How he does not believe that the US will default on their debt

2. Withdrawal of US stimulus in the form of Quant Easing and what investors should be watching in this process

3. How the Magellan Global Fund is positioned to generate returns for investors over the next 3 years


For more information on our views

Published in Investment Advice
Wednesday, 16 October 2013 12:37

US Debt Ceiling - still a stalemate

imagesTwo days out from the 17 October deadline, negotiations in Washington have (yet again) come to a halt. Key Senate figures had been working towards a compromise proposal, but those discussions stopped once news got out that House Republicans had rejected the plan without seeing any details, instead choosing to focus on their own initiative. If that wasn’t bad enough, it subsequently came to light that the House Republicans may not even have enough support to get their bill through the House, let alone the Senate. That this is the case has since been confirmed, with the Republican leadership cancelling a planned vote on the bill. There have since been some reports that the Senate has recommenced negotiations, but the House and Senate clearly remain miles apart.

We continue to see very little chance that a resolution will be found this week. 17 October is not the true deadline for non payment by the US government. Rather, it is 1 November and beyond where the real risk lies. Markets have, broadly speaking, remained sanguine on the fiscal situation to date, but recent market developments provide evidence that the market psyche may be shifting.

Here is what high profile investor and author of investment report "Boom, Gloom and Doom", Marc Faber:

"It's basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don’t see a solution."

We remain of the view that the US is highly unlikely to default on its debt obligations and that an '11th hour' solution will be found.

DISCLAIMER: The above information is commentary only (i.e. our general thoughts).  It is not intended to be, nor should it be construed as, investment advice.  To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.  Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and circumstances.

Published in Investment Advice