AQS Performance and Perspective - October, 2017


AQS| Asset Management for Insurers




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Did You Miss Us?

We skipped the September issue.  Financial news was overshadowed by natural disasters.  Sometimes silence is best.  


The Big Short.

A J.P. Morgan survey for the week ending October 2 found that 44% of clients were holding a short position relative to their benchmark. That's the most since 2006; up from 30 percent in the prior period. Among speculative accounts, a record 70 percent were short.  More at Bloomberg.


Move Over Elon.

Volkswagen, Daimler, Toyota, Tesla and.....Dyson?  Yes, vacuum cleaners.  It isn't as crazy as it sounds.  Below.


Natural Disasters Dominate

Harvey, Irma and Maria, collectively "HIM" will continue to dominate as earnings are released.  We go into some detail on each of the storms' financial impact in the AQS Point of View.  


The Fed - Still Looking for Inflation and Not Finding It.

Last week, the Fed released the minutes of the September FOMC meeting.  Lars Christensen posted some fresh ideas as to why the inflation they seek may not be showing up.  We cover his thoughts in this month's


AQS Point of View


AQS vs. Select Barclay's Total Return Data



Better Back Up That Hard Drive... you may see the Blue Screen of Death.


On October 8, a Kobe Steel press release announced the Company had "discovered...a portion of its products...did not comply with specifications."


The 112 year old steel maker and metals refiner generates over half its revenue from iron, steel, aluminum and copper.  Its products go into automobiles, rockets, bullet trains and much closer to home, the hard drive on your computer.


The company supplies nearly 60 percent of the aluminum disc blanks used in the world's hard drives.  



Dyson To Make the Jump From Vacuum Cleaners to....Electric Cars?

You may not know this face but you might own the product. Sir James Dyson is an inventor.  Among his inventions are the "ballbarrow", the "Trolleyball", a trolley that launched boats, the "Wheelboat"which could travel at speeds of 40 mph on both land and water.


Never heard of those?  Not many did.  Like any inventor, he stayed at it and came up with an idea he had seen at a sawmill.  The result?  The now-ubiquitous, Dyson vacuum cleaner.  Over time, he has used the technology developed in moving air to invent that hand dryer you may have used at the airport, the Dyson "Blade" (love that thing!).


Now the inventor has his sights set on electric cars.  Watch out Elon.  He's set a budget of £1 billion for the development of the car and another £1 billion to develop batteries.  This is about the same that has been spent to date on R&D at Tesla.


According to Dyson, "There's no point doing something that looks like everyone else's.  It is not a sports car and not a very cheap car."



ECB to Consider Reducing QE


Not unlike our own Fed, the European Central Bank has been trying to revive the EU with Quantitative Easing.  Like our own economy, the 2% inflation target has been elusive.  The question to be pondered is "when to back off?".


Officials who asked not to be identified because the discussions are private (they leaked it), indicated growing confidence that purchases can be cut from the current $60 billion Euros monthly to something more pedestrian, like $30 billion monthly.  


The IMF this week predicted the euro area will see inflation of 1.5 percent this year and 1.4 percent next year. ECB staff see inflation even lower in 2018, at 1.2 percent, before an acceleration to 1.5 percent in the following year. That's still undershooting the institution's goal of just below 2 percent





NAIC 2 Yields Lower and Tighter

10 year NAIC 2 Yields and Spreads

Killing my eyes - make it bigger!

Mutual Fund and ETF Flows

Maybe this has something to do with it?

Killing my eyes - make it bigger!




Client results shown are calculated using SIA standard investment formulae for portfolios AQS has managed in excess of one year.  Each portfolio complies with governing investment statues, regulatory testing standards and metrics.  Results vary based on the client's specified investment policy, risk tolerance, profit objective and product mix.  AQS works with each client to develop a global understanding of objectives for income and surplus growth as well as product opportunities that represent synergies in terms of growth and diversification.

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