For the week beginning October 12, 2015

Client portfolios are out this quarter in record time, although the performance is not what we would like our clients to experience. Our Quarterly Review and Outlook summarises the events of the last quarter in the first half of the document and gives our expectation of what we are likely to see in the markets for the quarters to come in the second half (e-mail us at info@bias.bm and we will send you a copy).

Although the S&P Global 1200 was down an extraordinary 8.6 percent, this same index has rallied 5.9 percent in the short time since the quarter end. Market pundits expect this volatility to continue. The rally so far this quarter comes on the back of short covering in the energy and materials sectors which last quarter were amongst the worst performing.

In order to make money for our clients we must stay focused on the economic fundamentals — ie, a recovery in the US economy — combined with fundamental and technical analyses of various sectors and stocks around the globe.

Here is what we expect going forward:

• Dollar strength as the US economy is most advanced in its recovery and higher interest rates in the US will support capital flows into the US dollar.

• Secular uptrends in technological connectivity, health care, healthy living, cyber security, and home building remain intact although recently re-rated in terms of valuation.

• Dividend-paying stocks have become more attractive, particularly REITs and integrated oils.

• Easy monetary policy will spur growth in Europe, Japan, and provide a soft landing for China.

What will weigh on markets until the next US election is political risk. This will come in the form of increased regulation on pharmaceutical, automobile, as well as private-equity and hedge-fund companies. Hillary Clinton has announced that she will impose price controls on drug makers whilst Donald Trump has stated that private-equity firms should pay the higher income tax on capital gains harvested from investments.

Most certainly auto makers will be monitored more closely in terms of meeting environmental standards following Volkswagen’s manipulation of pollution tests.

Although these regulatory changes may be appropriate, increased regulations, such as we have already seen in the financial sector, will slow down and dampen an economic recovery.

So global policymakers meeting at the IMF conference last week in Lima, Peru, must take this into consideration as the IMF advises its members how to shift their economic recoveries into higher gear.