A healthy correction?

The phrase “healthy correction” is one of the most frequently used in the investment lexicon. It has been ubiquitous over the past few days as a descriptor of the significant falls in global markets. It is also a phrase that has puzzled me over the years. As to “healthy”? Falls of over 4% in a … Continue reading “A healthy correction?”

What has driven stockmarket returns and what will drive them in future?

While the equity markets of various countries and regions have performed very similarly over the past three years, the components of returns have been very different. When we look back over the past three years, investors have earned remarkably similar returns in local currency terms in very different parts of the world. UK, eurozone, Japanese … Continue reading “What has driven stockmarket returns and what will drive them in future?”

Call of the city – how investors can profit from urbanisation

When we think about urbanisation, we often conjure images of newly constructed skyscrapers in Asia or rapidly-growing cities in South America or Africa. Indeed, the proportion of the world’s population living in towns and cities is forecast to increase from just over half today to two thirds by 2050 (source United Nations). Most of this … Continue reading “Call of the city – how investors can profit from urbanisation”

Farewell to 2017

Is it better to travel than to arrive?  The US share market has done well this year.  It has been in fitful anticipation of tax cuts to come.  As the old year draws to a close the tax cuts have as we expected taken legislative form. The US growth rate has risen, exceeding 3% as … Continue reading “Farewell to 2017”

You didn’t think European political risk was over, did you?

The crisis in Catalonia probably won’t derail the Eurozone recovery. But there are more political challenges ahead. Markets have largely shrugged off events in Catalonia. They are probably correct to do so. After all, Catalonia is unlikely to become independent, at least for the foreseeable future. There does not appear to be a majority in … Continue reading “You didn’t think European political risk was over, did you?”

Eurozone: Political risk still simmering

The major political obstacles, which had held back European risk assets, have now been overcome. However, events in Austria, Spain and Italy highlight the ongoing trend towards populist, nationalist and now regionalist sentiment. In Austria, although the far right Freedom Party (FPÖ) was recently defeated in elections for the legislative parliament, it could enter government … Continue reading “Eurozone: Political risk still simmering”

The politics of identity stalk European markets

Earlier this year investors worried that the euro was under threat. Its very future in the Netherlands and in France was on the ballot paper. As many of us expected, the euro survived its brush with democracy. In the Netherlands the anti-euro party topped the poll, but well short of the seats needed to govern … Continue reading “The politics of identity stalk European markets”

Nobody puts sterling in the corner

The story for September remains mundanely similar as for much of the year. Global political noise is barely being acknowledged by capital markets; central banks attempt to signal the way higher for rates without spooking the market; the global economy continues to bump along. Despite an increasingly aggressive stance from North Korea, a destructive hurricane … Continue reading “Nobody puts sterling in the corner”

Spain’s troubles will not derail Eurozone growth

Political risk stalks the Eurozone. The imposition of budget rules from the centre makes domestic politics in many of the zone’s countries difficult. Many of the countries have proportional systems which make majority governments a bit less likely anyway. The unpopularity of austerity policies to comply with Eurozone budget rules has aided in many countries … Continue reading “Spain’s troubles will not derail Eurozone growth”

The German elections and the markets

Earlier this year markets were stalked by talk of political risk in the Eurozone. The euro itself was on trial in the Dutch and French elections. Like many in the markets we thought the euro would win, and European shares would rise to reflect the quickening pace of economic recovery in the zone. So it … Continue reading “The German elections and the markets”

What’s wrong with low interest rates?

Interest rates are low, but is this a problem?  After all, in times gone by the worry was that rising interest rates killed off economic expansions. You know the story: inflation picks up as economic slack diminishes; central banks slam on the brakes; and recession follows. Since the global financial crisis, however, interest rates (and … Continue reading “What’s wrong with low interest rates?”

The Euro shares rally and French reform

The Eurostox index reached depressed December levels last year when many market participants feared that an anti-euro government might be elected in the Netherlands or France. It rallied to a high in May of this year, putting on around 20%. Markets anticipated the French election result and relaxed about the immediate prospects for the Euro. … Continue reading “The Euro shares rally and French reform”

Putting politicians on pedestals only leads to disappointment

It is hard to overstate the expectations resting on Emmanuel Macron’s shoulders. He has only just been elected and already he is being heralded as Europe’s saviour. But high expectations can easily drift into unrealistic ones. A little circumspection would better serve us all. Macron’s ascent is certainly remarkable. His party didn’t even exist eighteen … Continue reading “Putting politicians on pedestals only leads to disappointment”