Fear not – volatility is normal

After the long period of rather calm markets in 2016-17, we predicted that from 2018 onwards, we would see a return towards more normal levels of market volatility. Swings up and down in share prices – even big moves – are normal behaviour for markets. The upside from investing in equity markets is the potential … Continue reading “Fear not – volatility is normal”

The Only Game in Town

The US stockmarkets were the only game in town in August. US stockmarkets provided the only positives in August posting another month of strong gains due to robust economic news-flow.  However, all other major global regions showed negative returns, with geopolitical issues and trade war concerns weighing on investor sentiment. The overall result was a … Continue reading “The Only Game in Town”

Growth to slow as trade wars escalate

As a deeper and more prolonged trade war is anticipated between the US and China, we have downgraded our global growth expectations and forecast slower growth in both 2018 and 2019. Much of the slowdown can be attributed to the effect of trade wars. Europe and Japan disappoint Two of the world’s most export-oriented economies, … Continue reading “Growth to slow as trade wars escalate”

More trade disruption from US sanctions on Iran

There has been plenty of attention to the way the EU is caught in the crossfire of the US trade dispute with China. We also need to remember that the EU also stands to lose from the US wider dispute with Iran. The EU exported $10.8bn to Iran last year and is worried that US … Continue reading “More trade disruption from US sanctions on Iran”

Is the road to inflation taking us back to the 1960s?

The 1960s are remembered for radical social reform, political upheaval and war. Often forgotten is that they were also a time of rising inflation – and in this they may hold disquieting lessons for us today.   One of our key calls for 2018 is that consumer price inflation in the US will become an … Continue reading “Is the road to inflation taking us back to the 1960s?”

Can China get along with President Trump?

When President Trump met President Xi we were told the meeting went well. The two men recognised the power each held, and both had a reason to want a positive relationship. Mr Trump understood the influence China has over North Korea, and wanted help with sorting out the tensions over North Korea’s development of nuclear … Continue reading “Can China get along with President Trump?”

New Fed chair Powell raises rates, growth and inflation forecasts

As expected the Federal Reserve (Fed) raised interest rates by 25 basis points at the March Federal Open Market Committee (FOMC) meeting. The move increases the target range for the federal funds rate from 1.25%-1.5% to 1.5-1.75%. At his first FOMC meeting, new Fed chair Jerome Powell also announced that the committee is pushing up … Continue reading “New Fed chair Powell raises rates, growth and inflation forecasts”

The US Congress holds the purse strings and wishes to loosen them

In theory the President sets out a budget in February and the Congress responds with a Budget resolution in May. In practice the Congress runs the budget, and has just passed a two year budget deal regardless of the White House proposals that crossed in the post with their decisions. President Trump’s wish to cut … Continue reading “The US Congress holds the purse strings and wishes to loosen them”

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?”

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”

US tax cuts: do the sums add up?

The US Senate recently passed its tax bill supporting the Trump administration’s tax reform measures, which call for a $1.5 trillion net tax stimulus. Supporters of these tax cuts have argued they will result in stronger economic growth, as did the tax cuts of Ronald Reagan in the 1980s and George W Bush in the … Continue reading “US tax cuts: do the sums add up?”

Fed raises US rates once again

The US Federal Reserve (Fed) raised its key interest rate by 0.25 percentage points at its December meeting. It is one of Janet Yellen’s final major acts as head of the US central bank.  The Fed left its rate outlook for the coming years unchanged from its projections in September.  This is the fifth increase … Continue reading “Fed raises US rates once again”

Trump – one year on

A year on from Donald Trump’s election as US president, political and economic pundits are grappling with a big question: what is the significance of Trump? Is his presidency a boorish blip or a symptom of deeper malaise? Before Trump’s election, markets were fearful about the ‘bad things’ that he promised – American isolationism and … Continue reading “Trump – one year on”