Deforestation leaves investors exposed

Owning companies linked to forest destruction risks major financial losses. But focusing on engagement and demanding transparency and supply chain discipline could bring rich rewards. Deforestation linked to growing commodities demand presents significant risk of loss for investors, but also opportunities to benefit by engaging companies and adding to pressure for stricter policy actions. Deforestation … Continue reading “Deforestation leaves investors exposed”

Markets can get too exuberant

The recent all-time highs in the S&P 500 this week mean it has now hit more records this year than it did in 2018. There may even be more to come. However, it was at this time last year that an equity market sell-off gathered steam, with the usual “Santa Claus” rally failing to materialise. … Continue reading “Markets can get too exuberant”

Are we witnessing the US dollar’s fall from grace?

A world in which money is scarce might appear to be a far-fetched idea. But for US banks in the business of taking deposits and making loans, this has become a reality. The chart below shows a global shortage of US dollars has emerged, shown in the left hand vertical axis in  billions. It has … Continue reading “Are we witnessing the US dollar’s fall from grace?”

How far will the monetary boost go?

The world’s central banks are keen to boost economies. Many are using the scope of falling US interest rates to do something similar themselves. Some are worried about the lack of money in the markets and are taking action to boost liquidity. Some are concerned about a low rate of new borrowing reflecting poor rates … Continue reading “How far will the monetary boost go?”

UK economy rebounds to avoid recession

Unless the economy improves and a smooth Brexit is achieved, interest rates may be lowered.  The first release of UK GDP for the third quarter shows the economy avoided a technical recession. Real GDP growth was 0.3% quarter-on-quarter compared to -0.2% in the second quarter, although the latest figure did disappoint consensus expectations of 0.4%. … Continue reading “UK economy rebounds to avoid recession”

Investors must get used to an environment of lower growth

We will have to get used to an environment of lower growth. However, this is the kind of environment in which active managers will truly prove their worth. “Nobody buys a farm based on whether they think it’s going to rain next year. They buy it because they think it’s a good investment over 10 … Continue reading “Investors must get used to an environment of lower growth”

Muddling through with low interest rates

Central bank action has supported markets this year but we need to see a recovery in corporate earnings. The world should escape a general recession this winter. The forecast manufacturing downturn has occurred, led by falls in vehicle output. Individual countries have flirted with recession. Italy was in a shallow recession last year, and German … Continue reading “Muddling through with low interest rates”

Bank of England takes dovish turn, but for how long?

The Bank of England (BoE) left interest rates at 0.75% as expected. However, there was a surprise as two members of the monetary policy committee voted to cut rates. The more dovish1 vote (7-2 rather than the widely expected 9-0) came alongside a downgrade to the bank’s global growth assumptions. Weaker UK growth is also … Continue reading “Bank of England takes dovish turn, but for how long?”

A look at equity markets in Japan and China

On a day when Wall Street has reached new all-time highs, there has been some favourable effects on equity markets around the world. The bulls are buying, hoping that there will be some modest trade deal soon between the US and China. Meanwhile, all can enjoy the benefits of low-interest rates and more money available … Continue reading “A look at equity markets in Japan and China”

Smooth Brexit could be on cards as election looms

A smooth Brexit could remove some of the fog of uncertainty over the UK economic outlook, a prospect made more likely by the agreement to extend the deadline to 31 January 2020. EU President, Donald Tusk, has announced that the EU has agreed in principle an extension to the Brexit deadline to 31 January 2020. … Continue reading “Smooth Brexit could be on cards as election looms”

The comfort of strangers: investors should look to the less familiar

Adaptation is necessary when an environment becomes less favourable. So, as the global outlook assumes a gloomier cast, we believe investors should look beyond the comfort of conventional asset classes and bolster their portfolios with less familiar – and less correlated – assets. Secular stagnation? Recent headlines provide no shortage of alarming developments: a lurch … Continue reading “The comfort of strangers: investors should look to the less familiar”

The six biggest bull runs since 1962 (and their corrections)

The current bull market in US stocks started in March 2009 at the height of the global financial crisis and is the longest in recent history, beating the rally between July 1962 and May 1970 by over four years. At the time of writing, the bull market is still going. US stocks are up more … Continue reading “The six biggest bull runs since 1962 (and their corrections)”

The impact of US foreign policy on markets

Trade restrictions and tariffs are the main response of the Trump administration to foreign disagreements, but there are some positives too. Donald Trump moves markets. He watches them regularly and tries to influence them by what he says and what he does. He sees a rising US share market as proof that he is making … Continue reading “The impact of US foreign policy on markets”

Disruption from climate change is only just beginning for investors

Financial markets remain unprepared for the extent of disruption that climate change will bring, according to a new report. In September, the United Nation’s Principles for Responsible Investment (PRI) – a network of investors whose members include 500 global asset managers – released a report concluding markets have not priced in the coming policy response … Continue reading “Disruption from climate change is only just beginning for investors”

Is recession looming?

Are we about to have a global recession?  That was one of the many issues discussed at the Singapore Summit – a meeting of global policymakers and business leaders – Martin Gilbert, Chairman, Aberdeen Standard Investments,  attended earlier this month. Can monetary policies help prevent a global recession? There was a mix of opinions on … Continue reading “Is recession looming?”