MEASURE RISKS AND OPPORTUNITIES
BASED ON REAL DATA
We can apply a quantitative approach to test economic and market scenarios that may help you make more prudent investment and financial decisions.
Lever Analysis
Our platform tracks over 90 different economic factors including GDP
growth and CPI, market data like commodities and currency prices, and
industry-specific factors such as shipping rates and housing starts. Then,
based on statistical correllations, it analyzes the effect of these factors on
assets in your portfolioAsset Analysis
Our stress test scenarios can be used with a wide range of asset classes
including stocks, bonds, ETFs, mutual funds, closed-end funds, options,
separately managed accounts, hedge funds, and non-traded REITs.Scenarios
A scenario is a representation of a macro-economic or geopolitical event
which has the potential to impact investment returns. We can design
custom scenarios that reflect individual investor concerns, or apply our
broad catalog of risk scenarios to a portfolio to identify risk factors.
Trumpcare
What if Trump and the GOP end Obamacare through the budget process, but are not able to pass a replacement?
Past Crashes
This scenario covers the heart of the global financial crisis, from the collapse of Lehman Brothers until the market lows of early 2009, and examines the max draw downs of key levers over that timeframe.
Trump Agenda
What if President Trump and the GOP manage to successfully pass a tax cut plan?
S&P and other forecasters estimate an 11% rise in earnings if corporate tax rates can be cut to 20%
Rising earnings should continue to drive the market forward at a similar pace
Rising rates and inflation are potential risks as the US government deficit widens rapidlyTech Bubble
What if tech company valuations normalize, erasing the recent outperformance by the Nasdaq?
The Nasdaq has outperformed the S&P 500 by roughly 10% over the last year
Drop in tech valuations might start in private funding (VCs) and spread to public markets
A mild correction in the Nasdaq might ensue, with lesser impacts on other major equity indicesBond Bubble- Rising Interest Rates
This is a historical scenario capturing the changes in the economy from Oct 1993 to November 1994, when 10 year treasury rates rose from 5.3% to 8%.
This rapid rise in rates hit fixed income investors hard, leading to global bond losses of 1.5 trillion over a one-year timeframe.Global Conflicts
What if North Korea and South Korea fall back into armed conflict as a result of aggression by the new leader Kim Jong Un’s regime?
A real conflict in Korea would impact the Asian region as investors shunned risk throughout northern Asia. A serious conflict would result in the collapse of the North Korean regime, resulting in a potential intervention by China and the United States. The conflict would likely end quickly, but could result in significant damage to S. Korea’s economy and world trade.Fed Unwinding
What if the Fed takes a slow approach to unwinding the balance sheet, and targets a larger final balance sheet?
Janet Yellen has previously indicated the unwinding process could take a decade, and may stick with that slow approach
Ben Bernanke has advocated that the Fed maintain a long-term balance sheet far larger than the pre-crisis $900B
This conservative approach may not roil markets, but could still lead to a “taper tantrum” with a quick reboundDebt Cliff
What if the US is unable to make meaningful reforms to Social Security funding resulting in a likely 25% benefits cut in the 2030s?
Social security funding unchanged, leading to 25% benefit cut in 20 years.
Younger boomers forced to accelerate asset liquidation, pulling assets from market.
Lack of spending compounds demand problems seen in economy todayBaseline- S&P up 10%, down 10% model changes in treasury rates
What if the S&P has a minor correction and falls 10% over a short timeframe?
While S&P and Nasdaq both fall 10%, a short correction has little impact on economic metrics
Treasury rates would fall as investors flee risk
Commodities like oil might fall as fast as equitiesBoomers Retire
What if the Boomers gradually reduce their equity holdings as they move deeper into retirement?
If Boomers reduce equity allocations gradually, the net impact on market valuations could be modest A decline to a P/E of 20 would bring valuations in line with historical normsFed Stress Test
What if the economy falls into a deep recession as modeled by the Fed’s severely adverse scenario?
The Fed’s severely adverse scenario calls for:
Low, but stable inflation and record low interest rates.
A deep recession over the next year
Falling home and stock prices, with equities being cut in half.Death of Retail
What if a substantial drop in retail employment caused by ecommerce leads to a drop in overall economic activity?
Productivity gains like the shift to ecommerce usually help the economy
But if automation hits employment hard, it might cut overall consumer spending
Losses in consumer spending will hit GDP growth, markets, and commercial real estate