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04

Hi All

I am wondering why the Fed doesn't just come out and announce a date and programme for the ending of QE. I can't help feeling like it's become a bit of a game. Getting mixed signals from a recovering economy is nothing new. Waiting for sets of consistent data in the US while broad consensus is that things are improving, is seeming to me less and less like the way to go. The uncertainty created is not healthy. Perhaps we are near the end of QE, judging by the volatility and moves one sees as the market tries to adjust and price-in the effects.

The magnitude of the situation isn’t lost on me. This is the last chapter of the Great Experiment, and there is zero precedent for what follows. One of the things which remains to be seen is whether it is a good or a bad thing that Bernanke is stepping aside at this precise juncture, seeing as this is essentially his “baby”. Perhaps when he is gone, Janet Yelland will take firm control. Time will tell. 

Meantime, nothing new is really happening. Patterns have emerged which are guiding thinking for the next year or so, and smart managers have stopped chasing a while back already. They are holding their favourite shares locally, adding to their favourite offshore shares on weakness and avoiding interest rate sensitive assets everywhere. Cash allocations have been accumulating as a result of not seeing value rather than any top-down fear-based decision. 

Broad expectation is for a bout of consolidation after QE ends, but that the offshore recovery is intact and that cash will be deployed once the dust settles. Short term no one knows, but on a 5 year view there is consensus that the Great Recession will be behind us. 

That said, the year end is essentially upon us and this will be my last publication for 2013. Thanks for the support, it is always appreciated. I wish you a happy and safe festive season and all the best for the New Year.

Please note that our offices will be closed from 13 December to January 13th 2014. 

Kind regards,

Ricky Williams

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