Are markets underestimating geopolitical risk?

Every week it appears that North Korea tests a missile that falls safely in the Sea of Japan. Saudi Arabia and its close neighbour Qatar are having a spat about terrorism funding, could they come to blows and what would that mean for the oil price? Should we worry about such events? And how will … Continue reading “Are markets underestimating geopolitical risk?”

Politics takes centre stage, once again

Overview Global equity markets (ex-UK) were relative sanguine in April, gaining between 1% and 3% in local currency once sterling volatility was removed.  As can be seen below, the strength of sterling post the election announcement has detracted from that performance for UK investors, while the market has repriced large cap UK companies for the … Continue reading “Politics takes centre stage, once again”

Has QE failed, and if so why are markets clamouring for more?

The aim of Quantitative Easing [QE] was to support global economic growth in the wake of the Global Financial Crisis, and help to push GDP growth back towards its trend rate, typically around 3.2 – 3.5% for the world and 2 – 2.5% for the UK. This would allow the amount of outstanding debt to … Continue reading “Has QE failed, and if so why are markets clamouring for more?”

Monthly Commentary – October 2016

The FTSE World returned a little under 5% during the month of October. However, as has become a regular occurrence since the UK’s decision to leave the EU, currency devaluation was the primary driver of returns for UK investors. Versus the US Dollar, Sterling lost around 6% during the past month – essentially all in … Continue reading “Monthly Commentary – October 2016”

Monthly Commentary – September 2016

The FTSE World index climbed again in September with a rise of 1.2% in sterling terms. Year to date central banks around the world still appear willing to do what it takes to generate growth, and avoid recession and deflation. Politics remains important; the new government in the UK is now 100 days into its … Continue reading “Monthly Commentary – September 2016”

Keynesian vs. Monetarism

There have been two schools of thought in the history of economics; Keynesian and Monetarism. The former rests on the belief that government actions can determine growth in the economy, spending money on say infrastructure projects when demand is slack and reining back once the economy picks up. Monetarism on the other hand believes the … Continue reading “Keynesian vs. Monetarism”

Around the world and back again: has the globalisation theme turned full circle?

2008 may come eventually to be seen as the peak in the trend towards globalisation, the point at which the tide turned and the global spider’s web of supply chains and trade routes began to shrink. For several decades we have witnessed a continued expansion in the trade between economies around the world, crisscrossed by … Continue reading “Around the world and back again: has the globalisation theme turned full circle?”

Has QE caused a crisis of capitalism?

Capitalism has delivered prosperity, and countries that adopt the principles of free markets and enterprise are more prosperous. Witness the countries of the former Eastern Bloc. However it would be disingenuous to say everyone at all times benefit from capitalism. It does suffer from crises and the Great Financial Crash (GFC) in 2008 may be … Continue reading “Has QE caused a crisis of capitalism?”

Next stop, stagflation?

Stagflation is a poisonous mix of slow growth, inflation and unemployment. What causes it, and how to deal with its effects, divide opinion among professional economists. It gives central bankers and policy makers a severe headache and because it is difficult to combat, stagflation builds anxiety and uncertainty in financial markets, which is bad for … Continue reading “Next stop, stagflation?”

A lacklustre month – Is political uncertainty to blame?

May was a lacklustre month for equity markets with the FTSE World index rising by just 0.87%. Buoyed by some positive economic figures, the US stock market was the best performing asset class (up 3.7%) followed interestingly by UK gilts which rose by 2.4%, perhaps seen as a safe haven investment in the run up … Continue reading “A lacklustre month – Is political uncertainty to blame?”