The Philippines Gets It Right
For the casual observer in the U.S., the most remarkable outcome of recent elections in the Philippines is the ascension of boxing legend Manny “Pacman” Pacquiao to his home country’s upper legislative chamber.
For the “people’s champion,” there will be no multi-million-dollar rematch with Floyd “Money” Mayweather.
For guys like Wall Street Daily Global Markets Analyst Martin Hutchinson, the vote in the Philippines bears a more geopolitical/macroeconomic significance.
Sure, the Senate of the Philippines is a traditional springboard to the presidency. So the popular Filipino slugger may be on his way to an even bigger political title.
For now, however, investors can take great comfort in the fact that Rodrigo Duterte will succeed Benigno Aquino as president of the Philippines.
That the Philippines’ economy outperformed many of its regional peers in 2015 is solid evidence that Aquino’s efforts to improve infrastructure and reduce bureaucratic barriers to economic development are bearing fruit.
Although he comes from outside the Philippines’ traditional ruling families and he’s been criticized by outsiders for his nationalist tendencies, Duterte has sent strong signals that he will continue along the policy path marked by his predecessor.
As Martin writes in his summary of the situation, Philippines’ Election of Nationalist Rodrigo Duterte Bodes Well for the Country:
Duterte is no tycoon. But as the long-standing and effective mayor of Davao, a city of 1.4 million people on Mindanao island, he made the city safer and less corrupt, albeit using draconian methods against criminals.
As Martin noted in a recent Market Update to Currency & Capital subscribers, “What’s most important for us as investors is that Duterte shows no signs of socialism or grandiose public spending plans.”
Martin also checks in with a cautionary tale about peer-to-peer lending in the aftermath of Lending Club Corp.’s (LC) implosion.
As Martin notes, Lending Club CEO Renaud Laplanche resigned after the company reported that it had provided mis-assessed loans to Jefferies and Co., which was distributing the loans to institutional investors.
“The P2P lending business is yet another product of the “funny money” bubble,” writes Martin, “and when the bubble bursts, it’ll largely disappear.”
You can summarize Chief Technology Analyst Lou Basenese’s article on one of the stars of the social media phenomenon as follows:
Twitter : Characters :: Titanic : Deckchairs. (Or, “Twitter is to Characters as Titanic is to Deckchairs.”)
Like the Titanic, Twitter Inc. (TWTR) is going down no matter how it accounts for or arranges the characters in the tweets that drive the platform.
As Lou explained during an appearance on CNBC’s Closing Bell on Tuesday, May 17, “This latest change merely eliminates an annoyance on Twitter – but does nothing to make the platform more appealing.”
Chief Income Analyst Alan Gula discusses an innovation that may actually have some value for investors.
Alan summarizes the results of back-testing research on a high-yield government bond strategy. “The results,” he writes, “were fairly surprising.”
“From 1950 to 2012, the high-yield strategy actually outperformed an equal weighting of all countries in the universe by around 2% per annum.
“The outperformance was also consistent across decades, including both rising and falling interest rate environments.”
And, yes, you can get a piece of the action.
Finally, Chief Technical Analyst Jonathan Rodriguez has the antidote to summer doldrums that typically result in seasonal underperformance for stocks.
“But,” Jonathan points out, “one asset class consistently outperforms stocks during these slow summer months.
“And it’s showing all the signs to buy right now…”
Indeed, gold “represents a low-risk, high-reward play on market weakness through the summer.”