Benguela Global Macro Outlook 1Q 2020…….

The investment community is confronted with a flurry of mostly economic news and, to a lesser frequency, security-specific data. To make informed decisions, investors need to separate the noise from data that is useful for investment decision making.

At Benguela we pride ourselves in being a bottom-up investment house. In simple terms, this means that to allocate capital to each security it is the investment merits of that security that matter over everything else around it or in the world. This approach ensures that the decisions to invest our clients’ capital is not based on daily noise but on clear fundamentals of the security on a forward-looking basis. However, it would be remiss of us to inform our clients that macroeconomic data and trends don’t matter. They certainly do matter, but for a different reason than allocation of capital to each security. Analysis of macroeconomic data trends, over time, helps us fine-tune our risk appetite around our investment universe. This risk appetite comes in a form of concentration risk such as sector concentration risk or geographic concentration risk.

Like our security analysis, our macroeconomic analysis is structured to focus on specific factors that drive global capital markets. Our focus is predominantly on trends rather than forecasts which have been proven to be unreliable most of the time.

Following, is a summary of our views on the global macro outlook. For more detailed views, please refer to our detailed Macro report.