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In this legendary Stockhead series, investment manager James Whelan from VFS Group offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a damn fine professional money manager.
Note: Hosting a Global Outlook in a few weeks. Book a spot now and catch all of my views in a little more detail.
Sore legs and a sore back, this dad has been entered in the +40 category for the three-minute endurance at the National Rope Jump Championships in three weeks and in my determined way to never let anyone down I’m putting the work in so as not to embarrass the team.
Three minutes of continual jump rope at pace is hard. But it’s a great way to take the mind off the nonsense around the US market as we stagger into the end of May and a fast approaching debt ceiling…
We enter week 57 of the debt ceiling debate being the biggest thing in markets at the moment. Actually it’s been a few weeks of this nonsense which will surely get resolved just in the nick of time or a day or two late. I find it amazing that we go around this pantomime every now and then and it’s always THE BIGGEST RISK TO MARKETS every time.
See?
Anyway yes it should be in the corner of mind but definitely not given the air time it has been given.
As usual, it’s been talked about so much it’s a thing. It’s known. It’s not a massive panic event.
Heath and I go into it in further detail on the podcast which, funnily enough, is named after my patented Theory that the more something is talked about, the less impact it will have on markets once (if) it comes to fruition.
G7 was the highlight of the weekend and if you’ll remember I’ve been bullish India but more bullish on a souring of China/US relations. US decoupling met by China responses equals more business for India.
Let’s scan the funny papers to see what we get…
Serve:
Volley:
Also in the winners circle for continuing geopolitical shenanigans is Japan. The market is at a 33-year high and the tailwinds seem to be ongoing.
The FT have done an extensive piece on it which is behind their paywall. Anyone wanting a gift link please let me know and I’ll provide one if possible but this is the most important sentence summarising the biggest trades to be ahead of us in 2023 and beyond:
No exaggeration.
Japan came under scrutiny recently for us and I’ve always liked the investment case. Whilst stifled for allocation space at the moment – if you want to get involved in the Japan story it may serve as a good hedge for the India idea. If you assume that the China “thing” will continue for the next few years.
Quality, known names.
Finally we see one of the first derivatives of the heat “thing” in Asia.
Russian Energy is being grabbed on the cheap to make sure the air-con can stay on. Coal volumes are up 7.46m tonnes in April, about 30% higher than the previous year’s period, LNG shipments are up, as is Russian fuel oil, which had the two highest months of Asian imports on record.
Finally, finally Mac Bank research put out a lovely little note on quality screening the world and bullet proofing portfolios to withstand economic distress. The local names in the “OK” column were as you’d expect: BHP, CSR, ANN, WOW.
However the “bad” list is a ripper. Observe:
So if longer than expected recession is in your base case then here’s your “avoid at all costs” list.
Right, back to more rope practice…
All the best and stay safe,
James
The views, information, or opinions expressed in the interview in this article are solely those of the writer and do not represent the views of Stockhead.
Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.
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