GAME CREEK CAPITAL
JACKSON HOLE
GAME CREEK CAPITALSM
67 Batterymarch Street, 3rd Floor, Boston, MA 02110
July 2017 // INVESTOR PRESENTATION
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July 2017 // INVESTOR PRESENTATION
RICHARD (DICK) MAYO
Richard Mayo is Chairman and Chief Strategist at Game Creek Capital, a firm he helped start and has been invested in for ten years.
After receiving his undergraduate degree from the University of Virginia in 1964, Mr. Mayo began his investment career with the First Union National Bank in Charlotte, N.C. He received his M.B.A. from the University of Virginia's Darden Graduate School of Management in 1968.
After graduation, he was a security analyst for the Keystone Custodian Growth Fund. He was a founder of Batterymarch Financial Management in 1969, where he served as a portfolio manager. Mr. Mayo was a Founding Partner of Grantham, Mayo, Van Otterloo & Co. LLC (GMO) from 1977 until 2002, when he founded Mayo Capital Partners. He joined Game Creek Capital in February of 2017. Mr. Mayo is a member of the Board of Trustees for the Thomas Jefferson Foundation and serves on the Board of the Children’s Hospital Trust in Boston where he is also a member of the Investment Committee. Mr. Mayo served on the Board and the Investment Committee for University of Virginia Management Company (UVIMCO) and previously served on the Investment Committee for the MacArthur Foundation.
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July 2017 // INVESTOR PRESENTATION
S&P PERFORMANCE
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July 2017 // INVESTOR PRESENTATION
BULL MARKET ADVANCE AND DURATION
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July 2017 // INVESTOR PRESENTATION
CENTRAL BANKS: EXTREMELY ACCOMMODATIVE
Source: Evercore ISI 5
July 2017 // INVESTOR PRESENTATION
CENTRAL BANKERS HAVE FUNDAMENTALLY CHANGED MARKETS
• Central bankers have made asset purchases to unprecedented levels of annual GDP.
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July 2017 // INVESTOR PRESENTATION
EQUITY MONEY FLOWS BY INVESTOR TYPE AND ASSET CLASS
“Money, Money, Money!” ECB’s balance sheet increased +$14b this week or at a +$0.7t a.r. This helps explain why German bond yields are just 32bp and their 2-year yields are -57bp. All this has global implications, eg, low German bond yields are restraining US bond yields.
Recent headlines: “Fed’s Fischer Warns Against Complacency Over Stability Risks” “Draghi Sees Room for Pairing Stimulus Without Tightening Policy” “Federal Reserve Chair Janet Yellen Says Stock Valuations Are ‘Rich’ Right Now” Source: Evercore ISI 7
July 2017 // INVESTOR PRESENTATION
10-YEAR U.S. TREASURY YIELD
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July 2017 // INVESTOR PRESENTATION
CENTRAL BANKS NOTICE?
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July 2017 // INVESTOR PRESENTATION
ANNUAL RETURN WHEN INVESTED AT HIGH MULTIPLES
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July 2017 // INVESTOR PRESENTATION
S&P PRICE VOLATILITY AT ALL TIME LOWS
Source: Strategas Research Partners 12
July 2017 // INVESTOR PRESENTATION
FED BALANCE SHEET
Source: Strategas Research Partners 13
July 2017 // INVESTOR PRESENTATION
FEDERAL GOVERNMENT PROBABLY TO START FUNDING LONG
Source: Strategas Research Partners 14
July 2017 // INVESTOR PRESENTATION
DIMON: UNWINDING OF QE MAY BE MORE DISRUPTIVE THAN PEOPLE THINK
“We act like we know exactly how it’s going to happen, but we don’t” “We’ve never had QE like this before. We’ve never had unwinding like this before” Central banks want to provide certainty but “you can’t make things certain that are uncertain”
Reversal of monetary policy by selling securities in the marketplace “could be a little more disruptive than people think” Jamie Dimon, JPMorgan Chase & Co. Chairman
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July 2017 // INVESTOR PRESENTATION
“A BOURBON ADDICT DOESN’T GO FROM WILD TURKEY TO COLD TURKEY OVERNIGHT” Richard Fisher, former President and CEO of The Federal Reserve Bank of Dallas
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July 2017 // INVESTOR PRESENTATION
We wondered whether there was anything to be learned from paying attention to changes in our stability score and we looked into that idea using a year-over-year rate-ofchange measure. Consistent with many other studies we’ve done over the years we found that the destination is more important then the journey, and the results were weaker than those for the score itself. One interesting nuance was that the more stable the company’s fundamentals were initially the more excited investors got when they became even more predictable. In those situations the improvement was seen as believable.
Source: Goldman Sachs 17
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July 2017 // INVESTOR PRESENTATION
S&P COMPARED TO CITI MACRO SURPRISE INDEX
Source: Citi Research 19
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July 2017 // INVESTOR PRESENTATION
Source: Goldman Sachs 21
July 2017 // INVESTOR PRESENTATION
THE STREET EXPECTATIONS FOR THE MARKET COULD BE TOO HIGH
Source: Strategas Research Partners 22
July 2017 // INVESTOR PRESENTATION
Source: Goldman Sachs 23
July 2017 // INVESTOR PRESENTATION
Source: Goldman Sachs 24
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July 2017 // INVESTOR PRESENTATION
PRIVATE LABEL PENETRATION
Source: Morgan Stanley 27
July 2017 // INVESTOR PRESENTATION
EQUITY MONEY FLOWS BY INVESTOR TYPE AND ASSET CLASS
Source: Goldman Sachs 28
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July 2017 // INVESTOR PRESENTATION
FUND FLOWS: EQUITY VS BOND
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July 2017 // INVESTOR PRESENTATION
1962 KENNEDY/U.S. STEEL
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