News flash Mispricing political risk

Mispricing political risk

A trio of election results this past week serves to highlight just how inaccurate markets can be in anticipating and pricing political risks, especially in emerging markets. Investors and analysts were caught somewhat off guard by unexpected outcomes from polls in India, Mexico, and South Africa. In India, stocks and the rupee dropped sharply as…

News flash Challenging the interest rate dogma

Challenging the interest rate dogma

Over the past two years, the impact of interest rates on the US economy is a subject we have returned to multiple times in our newsletters. The conventional wisdom is that higher interest rates – which remain elevated in the wake of inflation – should dampen economic growth and equity markets. Following this reasoning, we…

News flash Sell in May and go away?

Sell in May and go away?

Rhyme-as-reason is a cognitive bias where humans are more likely to retain and believe advice phrased as a rhyme. Think of the harmless saying: “An apple a day keeps the doctor away.” Or, in the investment world, the adage: “Sell in May and go away, don’t come back until St Leger’s Day.” After the S&P…

News flash Populist policy pay-off for the ANC?

Populist policy pay-off for the ANC?

With less than two weeks to go before South Africa goes to the polls, the African National Congress (ANC) is pulling out all the stops to secure an outright majority in Parliament. The ruling party has somehow managed to dispel some of the negativity about corruption, unemployment, slow growth, and load shedding ahead of the…

News flash When will EVs “cross the chasm”?

When will EVs “cross the chasm”?

Last year, Tesla was riding high as a member of the Magnificent Seven Big Tech stocks that fueled stock market gains throughout the year. This year, the pioneering electric carmaker’s stock price has tumbled 27.6% in the wake of weaker demand for electric vehicles (EVs), making it the weakest performer among the Magnificent Seven. Tesla…

News flash The New Cold War

The New Cold War

Over the past decade or so, we have seen geopolitical tensions start to flare up again, following the relative stability from the end of the Cold War in 1991 marked by the dissolution of the Soviet Union. More recent landmark events have included the Crimean crisis of 2014 and heightened trade friction between the US…

News flash SA’s game of thrones

SA’s game of thrones

History abounds with kingmakers – figures who didn’t have the outright power to take the crown for themselves – yet had the clout to determine who would wear it next. With the ANC’s hegemony slipping away, South African politics is likely to create new openings for smaller political parties to pull the strings after the…

News flash Breaking up the band

Breaking up the band

Last year, a supergroup called The Magnificent Seven stormed the stock market and accounted for an outsized portion of returns. This year, the band of seven Big Tech stocks— Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — has broken up. Alphabet, Apple, and Tesla are no longer top of the pops. In fact, Telsa…