Japan’s consumer prices dropped for the third month and the BOJ has lowered their growth estimates making deflation a continuing issue within the country. These drops in prices could prompt more currency interventions in the currency should the Yen rally more on this news. Looking to Europe they may have a real threat of going the way of Japan if the main drivers of growth in the region (mainly Germany) start to see a slowdown in their economy.
A lot of Private Equity firms are shuffling companies among themselves in order to raise capital and keep the turnover of companies going. While this works in the interim for staying afloat in a market that is not friendly to IPOs or profitable asset sales. If this type of market continues, it could cause a lot of the less capitalized PE firms to run into liquidity troubles, forcing asset sales or even closures of funds. On the other side of the spectrum, if the macro environment starts to stabilize the higher yield that PE issuance has could become attractive to pension funds looking for yield.
The strategy Based on the New Normal is now live on the Virtual Stock Exchange
I will be adding the weekly commentary and a summarization of the fund to the Vine Strategy section of the website.