Our Views on the Markets and the Economy

Rising longevity and low interest rates are stirring up a perfect storm for investors – but a few smart decisions could generate a sustainable income for an extra 10 years or more in later life.

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Trump and the TPP

The beginning of this week has seen a significant announcement in the US that adds to the present policy debate, with investment implications. This is the comment made on Monday by President Elect Trump that on the first day in office he would sign an executive order withdrawing the USA from the Trans Pacific Partnership (TPP) between the US and eleven Pacific Rim economies.

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Bond Markets: Lessons from the US

In the wake of the victory of Donald Trump, financial markets have reacted strongly. As we touched on last week, the focus is on the possibility of a reflationary boost to the US economy, helping growth and raising inflation. As a result, US equity markets have rallied strongly and the dollar is very firm.

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Trump: The Economics

Don't panic. That is the first message for investors. After all that has been said in recent months, it would not be a surprise if some investors were concerned following Donald Trump's election as President. However, an equally important message might be to take a positive view of what might lie ahead for US economic policy.

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So what type of economy will the US President inherit? The outlook for the US economy matters for us all, given its importance as the world's largest economy. Moreover, the future direction of both US interest rates and the dollar will have global significance.

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Tuesday 8th November will see US citizens take to the polls to elect the 45th President of the United States of America - an event that potentially could have a significant market impact. Nevertheless, based on our assessment of the balance of risks and current polls, we feel that current positioning is appropriate as we approach election day.

Media coverage of the political jousting concerning personalities and several key electoral topics that has occurred over the past few months has been abundant, yet focus on key policies has been thin to say the least. The table below summarises key policies for each candidate that we think will have a tangible impact on financial assets, and hence clients' portfolio performance.

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Inflation: a large one-off rise on the way

Inflation is back at centre stage. And it looks set to remain there through much of 2017, as a combination of factors push prices higher. This week saw the release of the September inflation data and a rise in the year on year rate of inflation to 1% from 0.6% in August. Although this is a two year high, it is below the two per cent inflation target. Inflation was always likely to rise on an annual basis in September as falls in energy and food prices from earlier last year fell out of the comparison. Sterling's recent depreciation had very little effect on these particular inflation figures, but in coming months the full impact of a weaker pound will feed through.

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Another Stimulative Week For UK Policy

The last week has seen a number of significant developments linked to the UK policy agenda.

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UK and Global Economy Prospects

What is the state of the British economy?

For some years I have argued about the need for the UK to reposition itself in the global economy. The challenges the UK faces are not new: we don't save enough, we don't invest enough, growth is imbalanced as seen by the current account deficit and the dominance of London and all too often growth has gone hand in hand with too much of an increase in personal or government debt.

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