Our Views on the Markets and the Economy

Last week saw a headline grabbing rally in equity markets. Despite this, there is still considerable near-term uncertainty about the outlook for markets. This is highlighted by the continued low level of bond yields, reflecting the global recession that we are probably already in and policy rates that have fallen to close to zero, or below, across most western economies.

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ISAs have launched (and been the saviour) of many long-term savings goals. Yet they should not be just considered as an individual pursuit – when a whole family makes the most of their ISA allowances every year, the effect can be powerful.

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The UK is already entering a deep recession. The Chancellor has made a good start with a policy he has described as timely, targeted and temporary. This policy is, however, still too timid and needs to be titanic in scale. So far so good, but far more needs to be done.

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When markets are this volatile it is troubling, and when events are out of your control it is frustrating. Yet while you have no say in market performance, inflation or how long you may live, the factors you can influence when you invest could make a meaningful difference over the long term.

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How Should We View the Economic Outlook?

How should we view the economic outlook? The key question, as I see it, for the markets, is whether we will have a slump, recession, or a recovery. Is it an L-shaped, U-shaped or V-shaped economic outlook?

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Putting Market Movements Into Context

When world markets display worrying volatility, investors need to feel reassured that their long-term goals are on track. At Netwealth, we give clients the tools to see how short-term performance can be viewed in context with previous events to allow them to make informed decisions about their investments – which for most will result in taking no action at all.

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Budget Preview

The economy needs a large and immediate fiscal boost. The latest collapse in bond yields reinforces the attraction of using the maximum possible fiscal levers to stimulate the economy.

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The predicament we face now is unlike 2008, which was a Global Financial Crisis (GFC). This is a Global Health Crisis. Then the focus was on addressing financial issues. Now the focus is about addressing health issues.

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Inflation – Let’s Get Real

We often don’t account for things we think will have a negligible outcome. Because inflation is relatively subdued now we may imagine this scenario will persist and its effects will be minimal – but inflation can have a startling impact on your plans if it is overlooked.

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When Should You Change Your Risk Level?

When we think about investing it is useful to think about it in terms of risk – how much we should take, and how much can we afford to take to reach our goals. Therefore, it is relevant to ask, how actively should we change our risk level to respond to events or economic news?

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