How might higher inflation affect your portfolio?

The latest figures for US consumer prices showed that the rate of inflation increased the most since September 2008. This is raising fears that we are headed for a sustained bout of inflation. Rapid price increases lower a currency’s purchasing power, reducing the amount of goods and services you can buy with money. This damage … Continue reading “How might higher inflation affect your portfolio?”

Is the Federal Reserve really in control?

Whenever investors have a rush of doubt over inflationary pressures or the possibility the Fed might start to reduce its assistance, there are short, sharp sell-offs in riskier assets. The Fed is very clear about what it is trying to do. It is working closely with the Biden Administration on a huge joint stimulus of … Continue reading “Is the Federal Reserve really in control?”

Looking back at the markets through April 2021

A selection of articles looking back through the markets last month. Global Market Review Optimism drives share prices in April Global equity markets generally rose during April, buoyed by encouraging economic data from the US. The International Monetary Fund (IMF) upgraded its forecasts for global growth from 5.5% to 6% in 2021 and from 4.2% … Continue reading “Looking back at the markets through April 2021”

Inflation will rise and will test the Fed

The Federal Reserve accepts that inflation will rise above 2% this year, but the central bank insists this will be temporary and longer-term inflation expectations remain anchored. To many in the markets the authorities have got away with it. We have just lived through a period of unprecedented peacetime money creation by central banks, with … Continue reading “Inflation will rise and will test the Fed”

How much more QE? Markets need their sugar high

Last week the Bank of Canada slipped out that it was cutting its Quantitative easing programme by one quarter, taking it down to C$3bn a week of bond buying from C$4bn. They got away with it, and markets remained unruffled. Over at the ECB, Mrs Lagarde wanted people to know they are accelerating their QE … Continue reading “How much more QE? Markets need their sugar high”

Things usually turn out better than we feared

Over time things have a habit of turning out better than we feared. This is not to suggest that we adopt a Pollyanna mindset, but to simply highlight that there is a tendency to view uncertainty as a negative.  Now, if we turn to the business of investing the whole exercise is fraught with uncertainty, … Continue reading “Things usually turn out better than we feared”

How strong might the UK’s post-Covid economic recovery be?

Despite encouraging signs, policy support will be required for some time to come. It has been a tough start to the year for the UK. As lockdown restrictions continue to slowly ease, we examine the progress made in tackling the Covid-19 pandemic, and whether hopes for a strong economic recovery are well founded. Vaccines offered … Continue reading “How strong might the UK’s post-Covid economic recovery be?”

Which equity sectors can combat higher inflation?

The sharp rise in bond yields over recent weeks has rattled equity markets amid fears that fiscal stimulus and a post-pandemic spending splurge could stoke higher inflation. Five-year inflation expectations, as measured by the yield difference between nominal and inflation-protected US Treasury bonds, have rebounded sharply from their pandemic lows and are now at 2.5% … Continue reading “Which equity sectors can combat higher inflation?”

Looking back at the markets through February 2021

A selection of articles looking back through the markets last month.  Global Market Review Concerns grow over inflation Although most major equity indices ended February in positive territory, the month finished on a question-mark. A sharp sell-off across bond markets pushed up bond yields and drove down demand for growth stocks as investors assessed the … Continue reading “Looking back at the markets through February 2021”

Running hot – but not too hot?

Last year, the big themes that found favour in the market were the digital winners from lockdown and the potential green winners from Build Back Better. This year, there is more emphasis on the shorter-term winners from recovery. The speed and nature of that recovery is now at the heart of the market debates. Will … Continue reading “Running hot – but not too hot?”

Wall of money keeps markets buoyant

Inflation is not the enemy of central banks right now and their printing presses continue to run. Money creation look set to continue and government debts will rise. There is uniformity amongst the leading central banks of the world that recession, not inflation, is the enemy. They are all offering ultra-low interest rates, substantial money … Continue reading “Wall of money keeps markets buoyant”

Covid-19 and the Japanese model

The Japanese economy was in recession when the virus struck. GDP fell 1.8% in the fourth quarter of 2019 and experienced a further small fall in quarter 1 2020. Japan’s decline of 7.9% in the second quarter was a large fall by historic standards but was at the lower end of declines worldwide as economies … Continue reading “Covid-19 and the Japanese model”

Looking back at the markets through August

A selection of articles looking back through the markets last month. Global Market Review   Share price rises defy an uncertain outlook Global share prices generally rose during August as investors took heart from ongoing fiscal and monetary support alongside some encouraging economic data. Nevertheless, the global economic outlook remains “highly uncertain”, according to the World … Continue reading “Looking back at the markets through August”

Where to next for the Eurozone

Will the Coronavirus battle trigger a Eurozone war? The economic and health impacts of coronavirus have not been distributed equally across the Eurozone. In particular, peripheral countries such as Italy have been hit hardest in human and economic terms. This has reopened old fault lines between member states about a shared fiscal policy to offset … Continue reading “Where to next for the Eurozone”

The importance of forecasting humility

It is natural to want to rush to judgement about the long-term changes the coronavirus pandemic will bring, whether in an attempt to get ahead of the game or simply impose some order amidst the chaos. But as understandable as that impulse is, it can also be dangerous, allowing highly speculative claims to circulate and … Continue reading “The importance of forecasting humility”