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Digital Subscriptions > The Hedge Fund Journal > Issue 122 - May 2017 > US Macro Portfolio Manager

US Macro Portfolio Manager

Global growth, political risks and less financial repression: three reasons why I’m excited for global macro

My background is in currencies and fixed income. I started about 25 years ago in fixed income at UBS and soon graduated from fixed income to currencies, which is where I’ve spent most of my career, initially as a market maker at Goldman Sachs and then on the asset management side at Goldman Sachs. I worked on the fundamental currency strategy performing currency overlay and adding alpha through currency markets. I’m a big believer that currency markets are one of the best sources of alpha out there and no matter what’s going on in equity markets, or in fixed income markets, I think there are always good returns to be generated in currencies. I’ve been doing that since 1999 now and no doubt for years yet.

I am going to speak about global macro. I’m a little bit biased as I’m always excited by what’s going on in global macro. Sometimes there’s a lot of money to be made, sometimes there’s less money to be made, but I do believe that there is always money to be made in macro. Today there’s really two things that I want to focus on and the impact that they have on people’s portfolios.

Economic growth is accelerating and outpacing forecasts

Firstly, the acceleration in global growth makes it feel as though the global economy has finally broken free of the shackles from the Global Financial Crisis (GFC), nearly 10 years after the bust, but now we’re firmly in an accelerating global growth phase. Traditionally since the GFC we’ve always had economic growth disappointing forecasters and ongoing downward revisions to growth forecasts, whereas that’s now changed and we’re actually seeing an upside. We’re seeing global growth accelerating and we’re seeing upside revisions to global growth, with more optimism coming through, and that’s expected to continue throughout this year and into next year as well.

What I think that means is the end of financial repression. Since the crisis central banks have held interest rates low and even negative, and on top of that have been very active in fixed income markets, driving yields lower and preventing them from adjusting, so it’s been a low return environment. But because of the progress that’s been made in global growth I think that there are some signs that that period of financial repression can move on.

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