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On last week’s “Behind the Markets” podcast, we had a great discussion on the current macro and political environment— in the U.S., Europe and emerging markets—with Manish Singh, CIO of Crossbridge Capital, and long-time Federal Reserve (Fed) watcher and academic Tim Duy.
Singh oversees more than $3 billion in assets at Crossbridge Capital and employs a top-down macro approach to allocate assets around the world—looking at trends in GDP growth, inflation, earnings, consumption and other types of macro indicators.
Manish Singh on Global Markets
Trade Wars: A big discussion last week was the new Trump tariffs on steel and aluminum, and Singh chalked this up to Trump appealing to his base with a political gimmick rather than any reasoning motivated by economics—and he pointed out that the U.S. cannot compete as a low-cost producer with China. Singh does worry about these isolated trade actions having larger consequences with counter-measures coming. Who is vulnerable to these trade wars? Singh pointed out Europe and Germany in particular, where half of GDP is made up of exports—even more so than China—even though this is bad for everyone.
European Macro: Singh is still waiting for Europe to implement structural reforms—a lot of the positive economic developments he sees have stemmed from accommodative central bank policy. He looks at Italy as an example of a country that does not necessarily have a debt problem but has a growth problem. In general, Singh favors U.S. markets over Europe, but when he allocates to Europe, he says to look at many of the exporters that are selling into the United States, China and emerging markets, as their growth prospects are tied to economic environments around the world.
Over-Weight in Specific Emerging Markets: Singh thinks there are structural changes happening in emerging markets, but he is not over-weight in emerging markets broadly. He likes many of the Chinese technology and consumer-oriented stocks, and he is over-weight in them in addition to broad allocations to India along with private banks in India. He likes the trends in policy, growth and reforms with the political environment that Prime Minister Modi is taking.
