Market Commentary

A Dark Night Rises

Ben Ashby, Head of Investments

  • We have been expecting the recent turbulence in financial markets
  • We believe the authorities will find it extremely challenging to withdraw liquidity from financial markets
  • We remain defensive and await opportunities

“Calm down doctor, now is not the time for panic…that comes later!”
from the motion picture The Dark Knight Rises

The first thing we should emphasise is don’t panic. We have been expecting this.

We have repeatedly highlighted that we believe there is a wider ‘regime shift’ going on in markets. As a result, we expect greater volatility in asset prices. We also expect increasingly lurid headlines of financial chaos.

The bad news is we think it’s still relatively early days, the good news is we have built your portfolio with these conditions in mind.

At some point we hope to acquire some excellent long-term investments at even better prices.

“I’ve paid you a small fortune.”
“And this gives you power over me?”
from the motion picture The Dark Knight Rises

The world’s major Central Banks massively overdid the response to COVID. They have belatedly woken up to the issue that massive financial stimulus usually leads to inflation. They created the fuel and various events—such as the Ukraine war—provided the spark.

These very same Central Banks—including the all-important US Federal Reserve—are now trying to reduce inflation.

In our November client presentation, there was a slide called ‘Six impossible things’, we highlighted the scale and the difficulty of what the Fed is trying to do. Not only are they pushing up interest rates, but they are also trying to extract money out of the banking system.

My good friend Andrew Hunt (learn more about Andrew and his work at & I have written a series of opinion pieces for Nikkei Asia (Nikkei also owns the Financial Times) that highlighted what this likely meant for banks and financial markets.

In fact, we’ve just recently recorded a short podcast in an effort to explain the scale of the challenge.

“Stay here, I’m in charge.”
“Do you feel in charge?”
from the motion picture The Dark Knight Rises

Getting this right will be hard. The Central Banks now must deal with the problems they have helped create and battling a pumped-up financial system will be hard.

In fact, it’s more probable to our minds that the Central Banks will likely get things wrong.

Two important things to remember about the idea that ‘monetary policy acts with long & variable lags’. Firstly, it is likely that tightening financial conditions will continue to be felt in 2024—and possibly beyond.

Secondly, far more money has been lost in trying to time markets as opposed to staying invested. We have built a defensive portfolio and whilst it will likely move around, we believe it will position us well for better buying opportunities.

“Your money and infrastructure have been important…’til now!”
from the motion picture The Dark Knight Rises

Given our expectation of stress in financial markets we have spent time considering our own financial arrangements. We outlined these in a previous note.

We believe we have a robust set up, with relatively small amounts of cash held on any bank’s balance sheet. Given we are an investment manager ourselves, should we have any doubts about any of counterparties we can move any remaining cash balances into government bonds.

Lastly, my colleagues from both Rayliant & Henderson Rowe are active on social media. We are regularly asked to give interviews and write articles aimed at both institutional & private investors and can all be found online here:

Ben Ashby     Jason Hsu     Phil Wool


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