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  • July 23, 2020
    Corporate News
    Eoin Murray
    Federated Hermes has appointed two new hires to its Impact Opportunities team as client demand for sustainable investment solutions continues to surge. Reporting to Ingrid Kukuljan, Head of Impact Investing, Amélie Thévenet and Jordan Patel will be joining the firm’s London office in September and July respectively.
  • May 11, 2020
    Corporate News
    Eoin Murray
    The longest equity bull market in history (at least for the US) came to an end on the 19th February, just a couple of weeks short of its 11th birthday. .
  • March 15, 2019
    Corporate News
    Eoin Murray
    Are US China trade tensions really about steel, Jack Daniels and soy beans?
  • Eoin Murray
    Despite phenomenal long-term share price performance, Big Tech has been besieged from all sides – governments and regulators have been forced to increase scrutiny, investors are questioning the future economic consequences, while consumers question the FANGs’ social licence to operate. In response to the major issues faced by Big Tech, Sickly Tech, a report by Eoin Murray, Head of Investment at Hermes Investment Management, raises deep questions about Big Tech’s future, the risks for investors, and outlines the necessary steps to drive reform. Even the market ruckus earlier this year failed to derail the trajectory of the Big Tech leaders. Instead, the market witnessed dramatic outperformance by Big Tech and the FANGs (Facebook, Amazon, Apple, Netflix and Google), which benefit from the ongoing growth in internet commerce. Indeed, if the FANGs (plus Nvidia and Microsoft) are stripped out, the S&P 500 has fallen over the year to date - such is the influence of their phenomenal momentum. Even from a global perspective, the FANGs are a vital positive story, with global markets overall having fallen slightly in 2018.
  • Eoin Murray
    "It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness; […] it was the spring of hope, it was the winter of despair." Dickens’ famous opening words in The Tale of Two Cities could set the scene for the current market and macroeconomic climate – a world of latent volatility; where contradictory extremes loom as equally likely realities; where the slightest change in political winds could send events either way. Is it to be a time of inflation or disinflation, liquidity or illiquidity, growth or slump? The dramatic return of share-price volatility in the first quarter of the year indicates some plot issues that may be resolved in 2018, but others remain hidden in the subtext. In the latest Hermes Market Risk Insights report, Spring of hope, or winter of despair? Investors face Dickensian conditions, Eoin Murray, Head of Investment at Hermes Investment Management, explores the six key risks facing investors in extreme financial conditions.
  • February 8, 2018
    Macroeconomics and Risk
    Eoin Murray
    Is the recent global market sell-off a healthy correction or a foreshadowing of darker times ahead for investors? In the latest Market Risk Insights, ‘Before the luck runs out’, Eoin Murray, Head of Investment at Hermes Investment Management, explores the six key risks investors face as they trudge out into largely unmapped territory featuring extreme financial conditions. “Our ongoing concerns about the recovery’s tenure have been thrown into sharper focus by the steepest market sell-off since the credit crunch. In these exceptional times, as active investors, we need to probe beyond simple measures to gauge the underlying temperature of the broader financial system. “We exist in a period where the market is acutely vulnerable to a change in circumstances. Indeed, our Complacency Indicator has been fixed at worrying lows – suggesting an explosive spike in market volatility could be expected. As we have noted before, complacency does not guarantee negative outcomes, but investors should continue to be cautious, embed flexibility into their investment strategies and be prepared for any eventuality. “The coming year is likely to hold plenty of surprises. Central bank tightening, or at least the end of post-crisis monetary accommodation, will undoubtedly prove challenging. Long-dormant inflation looms as a tail risk, while the global political landscape remains unstable. Below, I set out the key risk gauges investors must consider when navigating markets that still reside at lofty elevations.
  • November 20, 2017
    Risk
    Eoin Murray
    In the latest Market Risk Insights, How to evolve in the new investment climate, Eoin Murray, Head of Investment at Hermes Investment Management, checks the temperature gauge and identifies risks investors should consider as we progress through the fourth quarter. The year may be almost at an end, but 2017 still has the capacity to shock. The shift from one monetary regime to another is unlikely to progress without convulsions in the market. In our consistently-held view, the current calm – reflected in low volatility and generally benign conditions – may hide deeper market vulnerabilities that could catch complacent investors. To remain ahead of the risk curve, we measure forward-looking ex-ante risk from as many angles as possible. Our models, built on the ever increasing piles of patterned data produced by the apparent chaos of daily market moves, help us discern likely hazards ahead. The following is a synopsis of the key findings.
  • September 18, 2017
    Macroeconomics and Risk
    Eoin Murray
    The investment industry spends far too much time focussing on short-term, benchmark relative performances, entrenched an “era of quarterly capitalism” Haldane, A G, (2010), “Patience and Finance”, speech given at the Oxford China Business Forum, Beijing. Moreover, short-termism delivers substandard returns for asset owners and for the financial ecosystem. True long-term investing is still extremely rare when it comes to active management in the public markets. In his paper, ‘Playing the long game: Investing effectively beyond the market cycle’, Eoin Murray, Head of Investment at Hermes Investment Management, looks at how long-term investing could be done. Defining characteristics of long-term investing Alignment of interests A crucial component and foundation for successful implementation is to better align the interests of asset owners and managers. Asset owners can set the tone and be leaders in developing balanced, long-term capitalism that ultimately benefits everyone. It is imperative to employ consistent processes and practices that look beyond short-term market turbulence and concentrate on the long-term fundamentals and drivers of a company’s strategy.
  • Eoin Murray
    Markets are running hot in 2017 and markets are apparently cool with this. The complacent mood was recently jolted as the VIX spiked at its highest levels since the election of President Trump in November last year, but amidst geopolitical turmoil, calm has seemingly returned again to the markets. Here we check the temperature gauges for accuracy and identify potential risks that investors should consider as we progress through the third quarter. Every week the St Louis Fed measures the degree of financial stress in US markets through an index that combines 18 different financial variables – seven relate to interest rates, six to yield spreads, and five others – into a single metric. For some time now, this gauge, called the St Louis Fed Financial Stress Index, has found that investors are relaxed. Given the importance of the US to markets worldwide, the index also serves as a reasonable proxy for global conditions. Apart from the intensity of the immediate aftermath of the global financial crisis (GFC) and a brief rally in the opening months of 2016, the St Louis Fed index has been trending down or flat in sub-zero territory (see figure 1).
  • Eoin Murray
    As we approach what may be the final chapter of the great monetary experiment of QE, Eoin Murray, Head of Investment at Hermes Investment Management, warns that companies and investors have long been insulated from market risks and many are now treading a dangerous path through the jungle floor. Like animals in captivity, companies incubated on the milk of QE and low rates may no longer exhibit the natural behaviours needed for success in the wild of a stimulus-free market. Following the global financial crisis, pro-monetary stimulus policies slashed the cost of servicing comp