A changing inflation perspective will reshuffle the field of investment opportunities, but the global economy is set to continue to grow.
You can view the full document in Word and PDF by clicking the links at the bottom of this email.
The full version covers these topics that we found of interest for investors:
- Time to take some profits
- Schrödinger’s markets: don’t fear growth and higher rates
After the weak February we take stock where the 24 months rally has taken us - UK Retailers feel the chill
ToysRUs and Maplin join the list of recent retail defaults. Should we be worried? - BoJ charts its own course
In this insight article, our head of investment, Jim Kean discusses why Japan’s central bank is likely to be last to tighten monetary policy
Emperor Xi?
China announced that president Xi will not be limited to the 2 terms in office. Necessity to succeed with crucial reform projects or return of ‘Chairman Mao’ power transition instability.
As always please feel free to read selectively!
February 2018 asset class returns
Time to take some profits
February brought a sudden, even if long expected end to the calm and steady rising equity market conditions. We wrote at length during the month what triggered the correction and what it is likely to mean going forward. In a nutshell, we agree with the view of many respected investment research institutions, that the return of more resilient global economic growth means that the end of the deflationary era has finally arrived. This will lead to a gradual normalisation of interest rates and bond yields away from the ‘lower zero bound’, but probably not higher than 3.5 – 4.5% over the remainder of this rate cycle. This reduces the relative attractiveness of equities and makes extended equity valuations less easily justified.
