As Doxa Special Projects Group (“Doxa SPG”) celebrated its first-year anniversary last month, we took some time to analyze the many macroeconomic events that transpired and what we are facing in 2018. Last year, we experienced something rare: worldwide economic growth. Most economies around the world grew at healthy rates. The U.S. economy extended its longest recovery in history, now reaching 104 months. Stock markets of developed countries around the world increased dramatically. Japan’s Nikkei index increased 19%, Hong Kong’s Hang Seng increased 36%, Germany’s Dax increased 12.5% and the S&P 500 went up 19%. All extraordinary numbers across the board which is why we are concerned.
In February 2018, we experienced the first abrupt and synchronized 10% correction in global equity markets. Market participants saw a hint of inflation in U.S. economic data and the 10-year government bond yield pushed abruptly higher. This one data point spooked the equity markets in the U.S. and the rest of the world all at the same time. One could argue that a little inflation after years of little to no inflation is a good thing. The problem is that this represents change and the markets hate uncertainty; the other issue is that there are plenty of big unknowns coming in the next two years and some are unprecedented.
We have inflation that is creeping up and a Federal Reserve (“FED”) that is expected to increase rates at least three times this year. The Fed is also in the beginning stages of “Quantative Tightening” which should inherently push rates higher over time. After a decade of Quantative Easing, we now turn to the experiment of the Fed selling the trillions of mortgage-backed securities and government bonds it had been buying. And to top it off, we have massive budget deficits projected for the next two years due to recently passed spending bills and tax cuts which will need to be funded by issuing more treasuries. The Treasury recently released estimates that its borrowing needs this year will be $955 billion and approximately $1 trillion next year. In essence, the U.S. government will have to issue a record amount of Treasuries at exactly the wrong time – when interest rates are spiking.
To navigate through these complex issues, we like to read the insights of Howard Marks, the legendary founder of Oaktree Capital Management L.P. You can find his latest newsletter here (https://www.oaktreecapital.com/insights/howard-marks-memos).
In a world fraught with risk, as we are reminded by the abrupt and synchronized correction in global equity markets earlier this month, Doxa SPG constantly strives to provide our clients with very specific and tailored information in order for them to make prudent decisions while minimizing intrinsic risks that are not readily apparent.
ABOUT DOXA SPG
DOXA SPG is a consulting firm focused on providing corporate finance advisory services, due diligence, litigation support and market research to clients in the U.S., Europe, South America and Asia. The company was founded by Christopher Vulliez in January 2017 and is based in New York.
Doxa SPG was formed to meet the special needs of middle market corporations and law firms who need a more specialized and personalized solution than is offered in the marketplace. Most large consulting companies cannot offer this level of flexibility due to the size of their overhead. We pride ourselves in providing clients with highly customized solutions that will meet their specific needs on a project, transaction or legal matter.
Doxa SPG also provides litigation support and financial analysis to law firms and former State and Federal prosecutors.
Christopher Vulliez
Christopher Vulliez founded Doxa SPG in January 2017. Prior to Doxa SPG, Chris was Managing Director of Washington Square Analytics, Inc., where he ran all of the firm’s corporate finance, due diligence and risk mitigation projects. Chris has been conducting financial analysis, corporate research and due diligence on companies globally for the last 23 years. Previously, Chris was a co-founder and Portfolio Manager at Cadmus Capital Management, Portfolio Manager at Perry Capital and senior research analyst at Brahman Capital Management.
Chris began his career at Dillon Read & Co, Inc. as an investment banker in the mergers and acquisitions department. Chris received a B.A. in Economics from Columbia University.
For More Information Contact:
Doxa Special Projects Group, LLC
Tel: 646-919-6464
info@doxaspg.com