Comments from around the world...
We are at a good portion of the way through earnings season and there have not been too many surprises that have caused us concern. Last week, we wrote about management conference calls and commentary from North American companies. This week, we thought that we would do the same for international companies:
- “Outside of North America, both the Europe and APAC regions were soft, mainly due to regional macroeconomic conditions” – Harley-Davidson ($HOG ) CEO Jochen Zeitz
- “Right now, frankly, we feel that Europe is following a more traditional cycle. The economy is cooling. It’s likely that the ECB will lower interest rates, maybe even before the Fed lowers interest rates. And that will be a good signal that now comes the time to start to gear up and generate more economic growth in Europe, and we would then hope to see improving PMIs in Europe.” – ManpowerGroup ($MAN ) CEO Jonas Prising
- “Since we spoke in December, we have seen consumer sentiment further slow across Europe, especially in our 2 biggest markets Germany and the U.K., and we have seen our wholesale partners there become even more cautious…we have planned Europe sales down high single digits in euros. Wholesale is planned down low double digits.” – PVH ($PVH ) CEO Stefan Larsson
- “I would say the consumer globally, we think is very resilient. And we see it in, as you saw from our international business performance. And it’s basically supported by two facts, very low unemployment or quite low unemployment globally and wages growing at a good pace in majority of the countries where we participate.” – PepsiCo ($PEP ) CEO Ramon Laguarta.
-
- However, in the same call PepsiCo CEO says: “I think Chinese consumers are being very cautious and we’re seeing the savings rate really going very high in China. Our category is still resilient in China, but especially we’re delivering growth through share of market gains in China. “
- “China’s economy continues to face challenges in recapturing its former momentum, compounded by consumer confidence remaining at historic lows” – Hugo Boss ($BOSS ) CFO Yves Muller
- “The geopolitical backdrop remains unsettled with multiple major wars and rising tensions globally. More than half the world’s population will go to elections in 2024, and the economic outlook remains uncertain as well.” – Marsh & McLennan ($MMC ) CEO John Doyle
“This means that” we continue to see limited risk of recession at this point, but clearly recognize that certain sections of the global economy are under pressure. As we mentioned before, this is one of the few times in my career where there is actual diversification between major economic zones (i.e. North America, China and Europe).
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
Changes in Leverage. We are increasing the asset ceiling to 2.0 times the market value of equity for Pathfinder International Fund and Pathfinder Conviction Fund to be consistent with Pathfinder Partners’ Fund and Pathfinder Resource Fund.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
Pathfinder Asset Management Limited (PAML) and its affiliates may collectively beneficially own in excess of 10% of one or more classes of the issued and outstanding equity securities mentioned in this newsletter. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor PAML can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your portfolio manager, who can assess all relevant particulars of any proposed investment or transaction. PAML and the author accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.