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Alternative Market Briefing

Comment: Entering 2015, US equity values are at fair valuation levels

Wednesday, January 21, 2015

Komfie Manalo, Opalesque Asia:

According to LJM’s President and founder Anthony Caine, 2015 is the first year in seven years where easy monetary policy will be reversed. The Federal Reserve ceased its bond-buying program in 2014 and is postured to increase interest rates. However, the implications to U.S. equities may be minimal. The cessation of the bond-buying program was easily absorbed, and, rate increases will occur at small increments. The overall cost of debt will still be near the bottom of historic ranges and the effect on debt and credit markets, housing, and other finance dependent sectors should be minimal. Wage inflation is negligible and shows no signs of increasing. The result is the Fed has minimal cause for tightening. Most important, reasons for a Fed increase will be tied to good US economic conditions.

"Entering 2015, equity values are at fair valuation levels. Solid U.S. macro fundamentals will provide market support, and elevated external risks will provide market resistance. The result is most likely a range bound market with higher volatility. We believe that extreme events will be required for the S&P 500 to move beyond a range of 1850 –2250," he said.

LJM Partners, a Swiss-based fund manager with $312m in AuM, closed 2014 on a positive note as December returns for its two hedge funds were again influenced by the strong correction in equity markets in the first half of the month ......................

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