Share market volatility – Trump and trade war risks Key points Worries about the Fed, trade wars (the risk of which has been significantly exaggerated) and President Trump generally have increased the risk around the global outlook but are unlikely to drive a major bear market. The key issue is whether the US is about to enter a recession and our assessment remains that a US recession is not imminent. The key for investors is …
Correction time for shares? Key points The US share market is long overdue a decent correction. This now appears to be unfolding and may have further to go as higher inflation, a slightly more aggressive Fed and higher bond yields are factored in. This will impact most share markets including Australian shares. However, in the absence of an aggressive 1994 style back-up in bond yields or a US recession – neither of which we expect …
01 February 2018 Higher global inflation and higher bond yields – what’s the risk and implications for other assets? Key points Rising global growth and rising commodity prices indicate the risks to inflation are gradually moving to the upside. This is most acute in the US with the Fed likely to raise rates more than the market expects this year. This supports the view that the 35-year super cycle decline in bond yields is over. …
19 January 2018 The risk shares and bonds will no longer correlate There is an old saying that “diversification is the only free lunch in finance”. While this adage is often wrongly attributed to Harry Markowitz, it does a great job of articulating the essential insight in his Nobel Prize winning research. What people who’ve followed Markowitz’s know is the attractiveness of an asset in a portfolio doesn’t just depend on its own expected return …
2018 – a list of lists regarding the macro investment outlook Key points 2018 is likely to remain good for diversified investors. The investment cycle still favours growth assets over cash and bonds. But expect more volatile and constrained returns as US inflation starts to turn up. Watch US inflation, bond yields, President Trump, the Italian election, China, the Sydney and Melbourne property markets and global business conditions PMIs. Introduction Although 2017 saw the usual …
13 December 2017 Investors found the “sweet spot” in 2017 It was a good year for share market investors in 2017, particularly for those who overcame the fear of a potential market correction and maintained exposure to global listed markets. Looking back on share market and asset price performance generally, the combination of solid global growth and profits and yet low inflation and benign central banks created a “sweet spot” for investors in 2017. Investment …
