Category Archives: Quarterly Letter

The Only Way is Up – Outlook 360 Fall Edition

Friday, September 28, 2012

Posted By: Matthias Paul Kuhlmey

At HighTower, we take pride in the fact that we do not entertain a “one-size-fits-all” investment view. Our firm’s Partners are considered to be some of the most experienced advisors on Wall Street and beyond. Nonetheless, given the more-than-challenging investment environment over the past years, it is hard to perceive that one single person may hold “all the answers.” With this in mind, we have embraced the concept of a collective knowledge-base, sharing best practices and ideas; our strength derives from the fact that we allow for differences in opinion, along with the necessary creative debate and responsibility that comes with this opportunity.

It is for this reason that we have dedicated the attached Economic Update 360 to some of our brilliant thinkers, allowing for brief insights into their ideas and related opportunities, and -last but not least- to allow our respected clients and friends to enjoy the true value of our HighTower Partnership. Please enjoy our collective ideas, including an understanding of where markets are trading “technically,” and what happens if “Wall Streeters” suffer from “CNBCitis” … please follow the below link for full text.

2012-09-28 The Only Way Is Up (follow this link for full text)

Europa! – Outlook 360 Summer Edition

Friday, August 3, 2012

2012-08-01 Europa! (Follow this link for full text)

Posted By:  Matthias Paul Kuhlmey

The topic of Europe is already complex when simply trying to appreciate the name given; in Greek mythology, Europa was one of the 3000 daughters of Titan Oceanus, son of Uranus, “the primal Greek God personifying the sky.” The landmass of Europe, however, was named after a Phoenician princess whom Zeus, the “Father of God and Men,” abducted after assuming the form of a dazzling white bull. The Phoenician noblewoman (Europa) later became the Queen of Crete, “the largest and most populous of the Greek Islands,” and “earliest civilization in Europe.”

In 1610, independent from each other, astrologers (Italian) Galileo Galilee and (German) Simon Marius discovered the smallest of the four Galilean Moons, orbiting planet Jupiter (Simon, seemingly, must have lost his place in the naming process). This particular moon, to be named Europa, was often considered “a subject, in both science fiction and scientific speculation, for future human colonization.”

As distant as the concept of space travel and human life seeking new habitat is most people’s understanding of today’s continental Europe and related socio-economic challenges.

Commonly, the word Europe, at least from a geo-political perspective, is used to make reference to only the European Union’s (EU) 27 Member States. The Council of Europe, on the other hand, is currently representing 47 member countries, with the EU nations being included in this count.

Even though Europe is the world’s second-smallest continent by surface area, the EU alone, with nearly 495 million inhabitants, represents the third-largest population after China and India. Economically, the EU is ranked first in the world in output, with a Gross Domestic Product (GDP) of $17.577 trillion vs. the U.S., in second place, with $15.094 trillion in GDP.

Given the socio-economic importance of the EU, financial market participants as well as global policymakers continue to be concerned with the evolving second iteration of the Credit Crisis of 2008/2009 – now exposed as a Sovereign Debt Crisis. For numerous European nations it has become difficult, if not impossible, to refinance government obligations in open markets without the assistance of third parties. This situation, paired with a dire balance-sheet crisis of most European financial institutions, has raised concerns over the viability of the EU as an economic region and of its single currency, the Euro (EUR/€), under the European Monetary Union (EMU).

Whereas it is a valuable debate to look at the causes of the crisis, our particular 360 Europa publication is focused on “the way forward” and what investors may have to expect and prepare for in the months to come…

Please click on the link at the top of this blog post for full text.

‘Seen the Future

Tuesday, May 15, 2012

Posted By: Matthias Paul Kuhlmey

 

I. Status-Quo

 

It was quite the fascinating spectacle, not only for little boys, when about two weeks ago, the final journey of the Space Shuttle Enterprise took course over New York skies. The “retired” shuttle will be installed at the Intrepid Sea, Air and Space Museum on the Hudson River and will go on display July 19, 2012.

 

“Nice,” one may think, as something “quite distant,” at least under previously normal circumstances, will become closer to the eye of an observer. On the other hand, this is a somewhat “tragic retirement,” as nothing comparable, at least so far, has replaced the Shuttle or the entire related Space Mission. The same is true for the once fastest passenger plane, the Concorde, which was taken out of service in 2003 and not yet replaced with an equivalent. No longer being able to fly between London and New York in about 3.5 hours, or to lift-off to space in a manned spacecraft, makes us wonder whether we are truly creating a technological evolution, or if we may be moving backwards (hopefully to prepare for the next “wave forward”).

 

When observing today’s state of global financial markets, especially when ignoring the “noise” of intraday trading of financial instruments and their price movements/valuations, one may wonder if we are moving backwards in this area, as well. If the situation is evaluated on a purely nominal basis (for most onlookers, a relevant indicator is the level of stock markets), the anticipated economic recovery since the onset of the Credit Crisis of 2008/2009 may well be underway. If, however, this aspect is judged from a broader perspective, the global economy and related financial markets may have become a place with increased levels of imbedded systemic risk – with expansive credit creation being only one of the contributors to this issue.

 

‘Seen the Future is most certainly a daring title for this Quarterly Outlook, but as a mounting number of our respected clients and friends continue asking about “how the entire dilemma could play out,” we will attempt to bring some answers, or at least raise questions that should be asked when prudently allocating money.

 

One of the most important things to explore is whether we have indeed been moving backwards and if this may continue for some time to come or, alternatively, if the “move forward” has already started.

 

We realize that we must accept a certain degree of personal and/or professional risk, since our messaging may appear overly concerned, or even negative, at times. In applying an elevated standard of care, as a fiduciary to our clients, we have no choice but to “tell it like it is.” Thus, a broad investment framework on how investors should be positioned will be part of this update.

 

Please follow this hyperlink  for the full report.