INSIGHTS & THOUGHT LEADERSHIP

REDWOOD BLOG | Jul 18, 2017

The 3 Ps: politics, profits, and probabilities

Fundamentals, not headlines, ultimately drive financial markets. Although it is always tempting to listen to the news, successful investing depends (perhaps more than ever) on a dispassionate review of fundamentals. We’ve attempted to sift through the current noise to highlight what we think is important and not, and summarized them as “The Three Ps” of […]

REDWOOD BLOG | Jul 17, 2017

Why Aren’t Consumers Spending?

One would think given low unemployment, rising wages, still low interest rates, high confidence and a rising wealth effect (thanks to a stock market at record highs and rising home prices) the consumer should be in the sweet spot in terms of spending. Yet we are pestered with such news as Sears declaring bankruptcy and […]

REDWOOD BLOG | Jul 10, 2017

China: Are Deflationary Policy Tools Coming?

Modern social democracies are supposed to choose inflation over deflation every time. Equally intriguing is the consensus in modern economic literature put forward by researchers such as Ben Bernanke that because of the inelasticity of nominal wages, falling aggregate demand “only” shows up in increasing unemployment rather than in decreasing per-employee pay. I am not […]

REDWOOD BLOG | Jul 10, 2017

What to Do About Oil, CAD and Yields

This week, we wrestled with what to focus our Market Ethos on, given the many big moves we have seen in the markets including yields, the Canadian dollar (C$) and oil. Our problem stemmed from the fact that these three topics were covered in the previous three weeks of Market Ethos (see links above). We […]

REDWOOD BLOG | Jul 4, 2017

Return of the Reflation Trade?

Over the past week we have seen bond yields move higher. This has included an almost doubling of the German 10-year bond, from 0.25% to 0.46%; of the U.K.’s, from 1% to 1.25%; Canada’s, from 1.47% to 1.77%; and to a lesser extent U.S. Treasuries, from 2.14% to 2.28% (first chart). Now, we may be […]

REDWOOD BLOG | Jun 26, 2017

Canadian Dollar: Has it Turned?

By Craig Basinger, CFA   “When the facts change, I change my mind. What do you do, sir?” – John Maynard Keynes   Has the Canadian Dollar Turned? To determine whether the Canadian dollar is now undervalued, we need to start by outlining where we are coming from. We have been U.S. dollar bulls for over five […]

REDWOOD BLOG | Jun 26, 2017

Oil In Purgatory: Where is the Bottom?

By Shane Obata, CFA and Chris Kerlow, CFA   In the first half of 2014, the oil outlook was bright Prices were rising, companies were investing and free cash flow was gushing. The good times were expected to last; on June 30th , 2014, the average analyst oil outlook (West Texas Intermediate, “WTI”) was to […]

REDWOOD BLOG | Jun 13, 2017

Active versus Passive Investment

Every investor seems well aware of the on-going debate of active versus passive investment management. ETF and index fund firms have strongly suggested that investors should view active managers as a group as both imprudent and expensive. Active managers are pushing back by suggesting that the trend toward passive investments is speculatively skewing the market. […]

REDWOOD BLOG | Jun 12, 2017

Potential Impact of a Housing Sector Pullback

By Chris Kerlow, CFA Housing-related expenditures are becoming an increasing component of our economy and have helped propel Canada to its current status as one of the fastest-growing developed nations in the world. The prolonged run in home sales, coupled with price appreciation, has tripled the contribution to GDP during this cycle, according to RBC […]

REDWOOD BLOG | Jun 8, 2017

Valuing Emerging Market Tech Stocks

By: Edward Lam Based on conversations in the last month, there are two things top-most in investors’ minds: how high tech platform stocks can go, and why the Emerging Markets Dividend (“EMD”) strategy did not invest in Tencent. The performance of tech platform stocks this year has been extremely strong. The average year-to-date return of […]