Monthly Letter December 2017
The world is going through a period of global synchronized growth. Europe, the region of eternal disappointments, has not just managed to keep pace with the US, but actually outgrew the US in 2017 and is expected to do so in 2018/19 as well. The difference is small, but still significant when you compare it to history. This has not been reflected in equity performance though, which will change in 2018. The valuations are not cheap and equity markets have clearly performed well on the back of strong hard economic data in combination with unusually high PMI indicators concurrent across the globe. In plain English: equity markets have to a large degree priced a good economic period going forward. Current environment should lead to higher inflation and subsequently higher interest rates. From a top down perspective you should buy banks and sell staple goods. We bear this in mind when we do our bottom up analysis.
Madrague had a good month in December: +2.28% which takes the year to date performance to -1.73%.