Conference call and Interview: US Equities according to François Mouté
François Mouté Managing Director of Neuflize Private Assets is a US Equity Markets specialist and Fund Manager of NOAM USA Opportunités and NOAM Ambition. He is considered as the best fund manager focussed on US Equity markets by Citywire* since many years and shares his views on the financial markets with us.
His latest conference call has been recorded at the 4th of June 2009: Conference call NOAM USA Opportunités 4 June 2009. Please find herewith the document that can be used as a guideline during this conference call:
Strategy François Mouté.
Interview
The year 2008 was extremely difficult. What is your opinion on the economic environment and the markets today?
I think it is important to look at a scale of time. The cataclysm has been built slowly but surely during the last couple of years. It is reasonable to mark 1981 as the beginning of the period that provoked this krach. Actually, it is the politics of Ronald Reagan of ‘Supply Side’, systematic deficit by reducing taxes, which started then and contributed to the accumulation of debt in a regular and considerable way. It took 27 years to build the economies destruction. Let’s be realistic: this will not be solved in 3 months. We will need time to discharge the situation and the evolution of the equity markets will have to stay erratic in the meantime. This does not mean we can not make any money during this period: we built our investment process back in 2001 with the idea that the constant growth of equity markets was behind us and that we would face a long, volatile period.
Nevertheless, the monetary injections and fiscal reductions that we see today are unprecedented which will reassure us on the short term but less on the long term. The risk of a deflation/ depression scenario comparable to 1929 does not seem likely to us as the governments have been very pro-active. Nonetheless, the liquidities injections, the loosening of the public deficits and the return to a monetary creation in the States may cause at the long term, a real inflation-risk.
The visibility remains weak but we think that, after having lost over 50%, the equity markets may rebound on the short term based on the saving plans and the attempts to stabilise the financial sector. On the other hand I do not think that the economy can start all over again at once so the end of 2009 might be more difficult.
How do you adapt your management style?
We make very simple, very transparent and very liquid investments. We buy equities and we sell index futures to reduce the net equity exposure. This allows us to combine our long term vision with reactivity at the markets, through the adaptation of our net equity exposure. Our long term vision leads us to energy, basic materials and industrial stocks. These are the ones to prefer within this horizon even though the world is quite pessimistic on these sectors. Looking back on it , we may conclude that the defensive stocks have finally been abandoned while the cyclical stocks that are liaised to the economic situation and that fell enormously in the autumn of 2008, have regained violently ground.
Taking the crisis into account, the US market has limited possibilities for growth but other regions in the world may bring a complement of growth to US companies that are strongly exposed to growth elsewhere in the world, within the energy sector for example.
This scenario is leading for Neuflize Private Assets. You can invest in our fund range: NOAM Optimum on Europe and NOAM Ambition and NOAM USA Opportunités on the United States of America.
*François Mouté is ranked first as a North American equity manager by Citywire amongst 259 managers worldwide. The ranking is based on the performances over 3 and 5 years as at 29 May 2009. Source www.citywire.uk.co