Every generation thinks that they live through unprecedented times. There certainly seem to be enough extraordinary issues to worry about currently, from political gyrations to the longstanding economic worries dating from the start of the global financial crisis 10 years ago. It’s true for many investors too: the belief that ‘this time it’s different’, as recent experience dominates attention and the lessons of earlier history fade from our collective memory. Financial markets have been unusually subdued in recent months, but this benign market environment too will pass at some point. And despite all the popular concerns, the catalyst for disruption of this collective mood will probably be something about which the financial world is not currently troubling itself.
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Let's begin with a question. What key economic word was not mentioned in the Bank of England's recent 44-page Inflation Report?
Don't worry, it is not a trick question. The same word was not in the previous Report in May either.
The answer is not "Brexit". The missing word was "money”. Pause. Digest. Think. Yes, money. I do not describe myself as a monetarist, but monetary developments are like an indicator on a dashboard, essential to keep an eye on. One would have thought a central bank, above all, would appreciate this.
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When we take a long-term view we are always conscious of the need to be aware of cyclical developments. Short-run economic cycles are superimposed upon long-run structural trends, sometimes coming powerfully together at times to drive markets.
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On Thursday, the Bank of England decided by a vote of 6-2 to leave interest rates unchanged at 0.25 per cent. They also opted to leave unchanged their other existing policy measures of £435 billion of government bond purchases and £10 billion of corporate bond buying. Changes to either of those, like any rate hike, would have marked a significant shift in the direction of policy and have had a market impact.
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Two key phrases help describe the current economic challenge facing politicians and policy makers in the UK and across the western world. These are "hyper normalisation" and "policy normalisation". How they are resolved will have a big impact on economies and markets in the year ahead.
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Overnight the International Monetary Fund (IMF) provided an update of their global economic outlook. Although the IMF is not a great forecaster, we take it seriously because it is an indicator of where benchmark thinking is on global growth.
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It may be a hot topic for investors, but what does the term “robo advice” actually mean? Here is some much-needed clarity from Netwealth COO and co-founder Thomas Salter.
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The unnecessary and unexpected general election has led to a political risk premium now being factored into the outlook for the UK economy and financial assets. Investors and savers frequently ask what are our views on the political outlook.
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The unnecessary and unexpected general election has led to a political risk premium now being factored into the outlook for the UK economy and financial assets. Investors and savers frequently ask what are our views on the political outlook.
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Earlier this week I attended the "Athens Seminar", an economic and political round table discussion that has been hosted annually since 1979 and that I have attended, on and off, over the last decade. This invitation only event brings together experts, policy makers and politicians from across the globe. I thought it would be of interest to share some of the main takeaways, as they help understand the current environment.
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