Fulcrum Diversified Absolute Return Fund - Institutional Class · NASDAQ:FARIX
Fulcrum Diversified Absolute Return Fund - Institutional Class — Fulcrum Asset Management LLP — Investor Presentation (January 2024)
18 slides from Fulcrum Diversified Absolute Return Fund - Institutional Class's investor presentation, Jan 24, 2024
Slide 1: Chairman’s Views
Chairman’s Views 24 January 2024 STRICTLY CONFIDENTIAL - DO NOT DISTRIBUTE
Slide 2: Markets have tilted a bit further towards a no landing scenario
Markets have tilted a bit further towards a no landing scenario 2 Markets have tilted a bit further towards a no landing scenario in the past week, but the big picture in the economic data and the markets still favours a soft landing this year Source: Fulcrum Asset Management LLP, Bloomberg
Slide 3: “No rush” – Christopher Waller
“No rush” – Christopher Waller 3 ► Waller captured the mood last week with a mild push back against early and large rate cuts. “No rush” was the phrase of the week ► A repeating theme from FOMC speeches has been increased confidence about low inflation but warnings that the Fed must not risk needing
Slide 4: The Fed had noted that PCE and CPI have diverged recently
The Fed had noted that personal consumption expenditure (PCE) and CPI have diverged recently 4 Source: Haver Analytics.
Slide 5: The Fed tends to prefer the PCE
The Fed tends to prefer the PCE 5 The wedge is mainly about shelter, especially rent and owner’s equivalent rent (OER). As shelter inflation continues to fall this year, CPI inflation would decline more than PCE inflation. Source: Fulcrum Asset Management LLP.
Slide 6: Core PCE of December will get a lot of attention this week
Core PCE of December will get a lot of attention this week 6 Market consensus has been hovering around 0.2%. Fulcrum’s best guess is slightly below that number. The dark and light red shaded areas represent the 68% and 90% forecast of the model respectively. For illustrative purposes only. Source: F
Slide 7: US inflation in coming months
US inflation in coming months 7 There have been concerns about a jump in headline CPI inflation in the February data. This seems to be mainly about energy prices and is not very worrying. The dark and light red shaded areas represent the 68% and 90% forecast of the model respectively. For illustrati
Slide 8: US inflation in coming months – Fulcrum forecasts
US inflation in coming months – Fulcrum forecasts 8 Core CPI run rate will fall towards 2% as shelter inflation subsides. Source: Fulcrum Asset Management LLP, Haver Analytics. The dark red and light red areas represent the 68% and 90% confidence interval for the forecast, respectively, and the red
Slide 9: US inflation in coming months
US inflation in coming months 9 Core PCE 6 month run rate dipped below 2% in November but may hover a little above 2% from now on. Source: Fulcrum Asset Management LLP, Haver Analytics. The dark red and light red areas represent the 68% and 90% confidence interval for the forecast, respectively, and
Slide 10: US inflation in coming months
US inflation in coming months 10 12 month headline PCE inflation (the target variable) may fall further but could probably remain above target and market swaps. Source: Fulcrum Asset Management LLP, Haver Analytics. The dark red and light red areas represent the 68% and 90% confidence interval for t
Slide 11: The FOMC is becoming concerned that labour market supply side improvements may be slowing
The FOMC is becoming concerned that the supply side improvements in the labour market may 11 be slowing An excerpt from the Wall Street Journal: Source: Wall Street Journal.
Slide 12: Fulcrum activity nowcasts for the US
Fulcrum activity nowcasts for the US 12 Fulcrum activity nowcasts for the US remain stable at close to 2% which is in the middle of a tight range. Advance GDP for Q4 is released tomorrow – GDP may be around 2% but final domestic sales could be at 3%. Source: Fulcrum Asset Management LLP, Haver Analy
Slide 13: US Summary
US Summary 13 ► Main forecasts still suggest a soft landing is very probable ► We now attach a 60% subjective probability to this outcome, down from 65% ► Given recent data and forecasts, we increase the probability of “no landing” from 20% to 25% ► This means that the probability of a hard landing
Slide 14: EU embarking on a slow recovery?
EU embarking on a slow recovery? 14 The Fulcrum nowcast is now validating economic forecasts that show slightly positive GDP growth in 2024 Q1. Source: Fulcrum Asset Management LLP, Goldman Sachs, JP Morgan.
Slide 15: EU embarking on a slow recovery?
EU embarking on a slow recovery? 15 ECB survey of bank lending standards has eased, taking the MCI into less tight territory. Excerpt below from Morgan Stanley, with thanks…. Source: Bloomberg, Morgan Stanley, ECB.
Slide 16: ECB meeting tomorrow may point to June rate cut
ECB meeting tomorrow (25.01.24.) may point to June rate cut 16 ► A key comment from Lagarde at Davos suggested that a rate cut around mid year was a reasonable expectation ► Important hawks Nagel (Bundesbank) and Holzmann (Austria) have also suggested that rate cuts in the second half of 2024 are po
Slide 17: BoJ delays key decision but Ueda hints that April is a live meeting
BoJ delays key decision but Ueda hints that April is a live meeting 17 The January BoJ meeting increased forward policy rates slightly but did not disturb the yen or the equity market. Source: Fulcrum Asset Management LLP, Bloomberg.
Slide 18: Disclaimer
Disclaimer 18 Any views and opinions expressed are for informational and/or similarly educational purposes only and are a reflection of the author’s best judgment, based upon information available at the time obtained from sources believed to be reliable and providing information in good faith, but
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