Geopolitical Change and Asset Class Rotation
Christopher Peel - Chief Investment Officer2017 is shaping up to be a year of momentous geopolitical change, especially in the United States and in the United Kingdom.
Democracies on both sides of the Atlantic have voted in favour of a shift towards nationalism, protectionism and the pursuit of greater sovereignty. It is far too early to predict the long-term market implications of these surprising political events. Investors will need to rely on strong risk management, portfolio diversification and patience during periods of heightened volatility.
The vocal minority in the US and many of the world’s political leaders may not like his policies, but Middle America swept him to victory and these voters are getting exactly what was promised. The Trump rally in the US equity markets is not surprising given his radical views on existing trade relationships, infrastructure spending and border controls. In time, US based manufacturing companies will regain the market share lost during the last quarter century, especially at the expense of bordering countries such as Canada and Mexico.
The government will eventually negotiate separate trade agreements with countries such as the US, China, and Australia. The UK is in a strong negotiating position to retain most of its current trade flow with the EU, given that it purchases more goods than it sells to the continent. These new trading relationships will ultimately lead to a strong recovery in sterling and a more balanced economy, which is already the strongest within the G7 countries.
Tide may be about to turn
The following is an abbreviated version of John Leiper’s article ‘Tide may be about to turn’ for Investment Week magazine. Follow the link and read his views on page 23.
Q2 2021 Quarterly Perspectives
Welcome to the Q2-2021 ‘Quarterly Perspectives’ publication.
Innovation in the ESG Eco System
Tavistock Wealth have come together with MSCI and LSE SU Green Finance Society to discuss Innovation in the ESG Eco System, alongside data analytics with MSCI.
Green Finance Summit 2021
Our Portfolio Manager for ESG, James Peel, was recently invited to provide his valuable insights into “Innovating Towards a Greener Future” as part of the London School of Economics Student’s Union Green Finance Society’s video conference: “Green Finance Summit 2021”.
The Great Rotation
In Nothing Is More Powerful Than An Idea Whose Time Has Come, published in November, we introduced the idea of a Great Rotation across US equity markets. As shown in the chart below, this rotation is playing out in textbook fashion with value stocks outperforming growth by about 20% since the end of last year.
The Unemployment Problem
The Fed’s dual mandate is price stability and maximum employment, but Jerome Powell has been unequivocal that it’s all about the latter.
Q1 2021 Quarterly Perspectives
Welcome to the Q1-2021 ‘Quarterly Perspectives’ publication.
Reflections
This is the first blog since the holiday break. Whilst travel restrictions meant it wasn’t the holiday that had been planned, we adapted, and enjoyed the opportunity to spend some time together as a family and reflect on the last few months.
Rise of the Underdog
In its latest economic outlook, the OECD increased its expectations for global GDP.
Let the Good Times Roll
Markets are ebullient, and they have every reason to be.
Is the Bond Market Smarter than the Stock Market?
Following on from last week’s blog, the dramatic rotation from growth to value remains in place for now. Early signs of quick snapback into the prior channel have not yet materialised and instead the ratio has consolidated and even shown signs of moving.
Nothing Is More Powerful Than an Idea Whose Time Has Come
On Monday afternoon, global stock markets soared on the news BioNTech and Pfizer had created a coronavirus vaccine which proved 90% effective based on initial trial results.
