Investment View - January 2011
Economic concerns are switching from double dip recession to inflation and the likelihood of interest rate rises. It is, nevertheless, encouraging that more and more commentators are sharing our view of
cautious optimism for 2011, and indeed investors are slowly migrating from lower risk asset classes into equities. 2010 marked the third consecutive year of net outflows from equities. Over the past
three years, outflows have totalled $268bn while inflows into bonds have totalled $644bn. While it is too early to call for a definitive shift, early signs do appear to be pointing to an inflection point.
Investment View-January 2011
Investment View - February 2011
Since the start of the year three topics have continued to grab the financial headlines. Economic
growth, or indeed the lack of it, inflation and increasing interest rates have now taken the place of
recession, double dips and the ‘demise of the Eurozone’. These topics are all very important to the
successful management of any economy but before pressing the panic button, let’s reflect.
Investment View - February 2011
Investment View - March 2011
The situations in the Middle East and Japan have dominated world attention over recent days and
weeks. These events are likely to take some of the shine off global growth, but unlikely to derail it
completely, but to lead to further upward pressure on commodity prices, including oil and gas.
However, we are still a long way from being tipped into global recession. The current situation only
reinforces the view that inflation risks remain a dominant concern.
Investment View - March 2011
Investment View - April 2011
April continues our roller coaster ride through 2011 with contrasting news from around the world
impacting edgy markets both positively and negatively, giving lots of oxygen to volatility once again.
Earlier in the month we read that Global stocks were advancing to cyclical highs as the glow from
strong US jobs data provided a counter to soothe the market’s anxiety of Middle East turmoil, Japan’s
earthquake travails and Eurozone fiscal woes. Then, somewhat out of the blue, Standard & Poor’s,
the credit rating agency, decided to put the US on negative outlook sending a tremor through world
markets.
Investment View - April 2011
Investment View - May 2011
A good performance from the market in April saw the FT All Share Index up by 2.5% despite ongoing
Mid-East/North Africa (MENA) tension, possible supply-chain disruption in Japan and rising
commodity costs around the world eroding recovery. Positive US earnings continue to strengthen
equity markets with 75% of companies beating consensus analyst forecasts but, despite volatility
staying quite low, uncertainty is staying stubbornly high.
Investment View - May 2011
Investment View - June 2011
About three years have passed since the eruption of the financial crisis. Thanks to the joint efforts of
the international community, the global economy is recovering. Yet there remain many uncertainties
and the recovery is fragile. Global growth is uneven; unemployment in developed economies remains
high; government debt risks in some countries have mounted; inflationary pressure is increasing.
While the shock of the crisis has yet to end, new risks have emerged. The world must co-operate
closely to meet the challenges and would seem determined to do so.
Investment View - June 2011
Investment View - July 2011
The last few weeks have been dominated by the problems in the Eurozone and all asset classes were
impacted by the concern that failure would lead us into unknown territory.”Financial markets can often
be fickle creatures as investor behaviour in the short run is driven by emotion” so said a senior market
commentator this month. Emotions were running high.
Investment View - July 2011
Investment View - August 2011
The term ‘rollercoaster ride’ has rarely been a more apt description of recent stock market behaviour, with both the biggest one day fall and the biggest single day rise since the collapse of Lehman Brothers in 2008. Volatility creates fear, and even panic, whipping up ever more volatility in an almost self-perpetuating froth of irrationality. But what does it all really mean in practice?
Investment View - August 2011
Investment View - September 2011
There has been no single catalyst for the recent stock market decline. Instead a toxic mixture of political, economic and financial gloom has continued to trouble the markets. And after years of living beyond its means, the harsh reality is now dawning that the US economy may be in for a period of significantly slower growth. The US is not the only economy facing this reality but it is the most high profile and that has undoubtedly added to the markets uncertainty.
Investment View - September 2011
Investment View - October 2011
Since early October we have seen eight consecutive positive trading sessions, with the FTSE rising by over 10%. So what are we to expect from the last quarter of 2011 and into 2012? As we have stated many times, much will depend on European policymakers and their ability to agree a credible solution for the Eurozone, and continuing evidence that the US economy is moving ahead positively. Until this happens, markets will continue to be very volatile.
Investment View - October 2011
Investment View - November 2011
November's now infamous weekend of Eurozone talks was supposed to deliver a set of solutions that would finally contain the sovereign crisis. However, almost four weeks on bond yields are running at 14-year highs and sovereign and banking problems are still closely entangled. The headlines that came out of this round of talks were enough to trigger an improvement in equities. Over the month to early November stock markets around the world enjoyed one of their best months on record, with most indices up more than 10%. Even MSCI China, usually slow to respond to rallies, gained close to 30%. Markets are eager to respond and rally, but European governments constant lack of real and deliverable solutions to Europe’s debt problems continues to drag markets back down and threaten to put Europe back into a recession due to the uncertainty engulfing the region.
Investment View - November 2011
Investment View - December 2011
At this time last year we looked forward with some optimism that the recovery seemed to be gaining momentum
and the problems in the Eurozone would be addressed. We stated then that ‘the situation would need to be
really incompetently managed to result in a second credit crunch and banking crisis.’ We never expected the
politicians would fail to take a firm grip of the problem, but they have, and the markets have been very volatile as
solutions were threatened but not delivered.
Investment View - December 2011
Investment View - January 2012
2012 looks set to be another year of volatility and uncertainty for investors as the developed world continues to deal with reducing debt and spluttering growth. Although the Eurozone’s debt crisis seemed to reach new heights of urgency in 2011, political leaders are still struggling to find a definitive solution that will preserve the European monetary union’s stability and credibility. Meanwhile the region slides closer to recession.
Investment View - January 2012