Quarterly Investment Outlook: September 2015

SUMMARY

• In a highly indebted global economy where producers are trying to capture a larger piece of a smaller pie, no country can tolerate an overvalued currency for long.
• During the last three years, we have witnessed successive devaluations in all major currencies i.e. Euro, Yen, Aussi dollar, loonie, rouble, Brazilian real and most recently China's remnimbi.  The U.S. dollar could be next
• 3Q GDP is tracking at 1.3 percent according to the Fed Atlanta Bank's tracking model.  Should growth slow to 1-2 percent, employment gains will register sub 200K per month.
• We believe financial markets are rioting and beckoning Fed policy makers for reflation.  A fed rate hike is highly unlikely over the balance of 2015 and QE4 is possible.
• Gold is breaking out to the upside and other commodities may follow suit.
• China needs to step up its reflation efforts.
• U.S. bonds will outperform equities, until the reflation trade is discounted by a recovery in the EM currency markets.

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