Investment Strategy: Third Quarter 2019
Welcome to the third quarter 2019 investment strategy.
(You can email, print or create a PDF using the convenient icons at the bottom right of each article).
General Market Review
There is a broad agreement that global growth is slowing and downside risks are increasing.
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Specific Market Reviews: United Kingdom
In the first quarter of 2019 GDP grew at a surprisingly robust annual rate of 1.8% y/y.
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Specific Market Reviews: United States
Despite a prolonged government shutdown and fears over slowing global growth, the US economy beat first quarter growth expectations.
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Specific Market Reviews: Europe
The year started with fears that the Eurozone was plunging into recession but this proved to be overly pessimistic.
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Specific Market Reviews: Emerging Markets and Asia
Q1 Chinese growth surprised on the upside at 6.4% y/y but as usual appears somewhat contradictory with weak domestic demand and contracting imports but surging industrial production.
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Fixed Income
Slowing global growth, falling inflationary expectations, increasingly dovish Central Banks and a political backdrop that has become increasingly fraught, have led to a bumper year thus far for Bond investors with yields plummeting during the quarter.
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Commercial Property
Property valuations have hit the pause button like so much of ‘real life’ British industry and commerce as Brexit stretches excruciatingly onwards.
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Commodities
Gold finished the quarter at a six month of high of US$1400/oz. leading to the usual heated debate between gold bugs and the non-believers as to what drives the price of the yellow metal.
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Currencies
The US dollar remains the key to a lot of what happens in global financial markets.
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Heavy is the head that wears the crown
Those of you who know your Shakespeare will recognise this line about the responsibility of leadership from Henry IV.
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Investment Strategy: Third Quarter 2019
Welcome to the third quarter 2019 investment strategy.
(You can email, print or create a PDF using the convenient icons at the bottom right of each article).
General Market Review
Global growth remains firm but is starting to lose some momentum. Inflation remains muted. The US Federal Reserve Bank has raised interest rates twice this year with another two rises likely before year end.
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Demographics – The Rising Tide
Investment Manager James Tuson discusses an every growing population in an ever shrinking world.
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Currencies
The US dollar rallied in the quarter as political travails and disappointing economic data proved headwinds to the euro and sterling.
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Commodities
Oil prices remain firm having touched US$80/bl at one point which prompted a significant rally in energy stocks. Gold has weakened in the face of higher interest rates and a strong US dollar.
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Commercial Property
The Commercial Property cycle has become increasingly mature and returns will likely be lower going forward, driven almost entirely by rental income rather than capital growth.
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Fixed Interest
Long dated bond yields marked time in Q2 after the sharp spike in the first quarter and we expect similar for the remainder of the year.
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Emerging Markets, Asia and Japan
Emerging Markets have produced very disappointing returns this year as they face strong external headwinds, notably tighter US monetary policy...
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Specific Market Review: Europe
The ‘great economic recovery’ story is losing some momentum and events in Italy highlighted the ongoing dysfunctionality of the Eurozone.
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Specific Market Review: United States
The economy remains in good shape and corporate earnings growth is forecast to be around 20% this year which mitigates some of the valuation concerns.
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Specific Market Review: United Kingdom
Brexit and the prospect of a Corbyn government remain dark clouds but one gets the sense that the UK is emerging from its pariah status in the eyes of global investors.
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