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Investor Insight - Winter 2019-20

  • Quarterly investor insight
  • 10 minute read

Summary

  • While the global macro-economic backdrop is still one of low growth, we see evidence of a cyclical upswing, although the Coronavirus outbreak may mean any improvements take longer to appear.
  • The continuing backdrop of moderate inflation in the US should allow the Federal Reserve sufficient scope to keep rates lower for longer, which in turn should support growth and asset prices.
  • Political risks remain prevalent. The US election may well begin to weigh on investors’ minds as November approaches, while the UK’s future relationship with the European Union remains uncertain as the two parties navigate their way through the transition period over the course of 2020.

The last decade was unique in that it did not witness a US recession. The current period of economic expansion now continues towards its twelfth anniversary, comfortably the longest period of post-war expansion on record.

Though we continue to monitor the risks to markets closely, overall we believe that the economic backdrop, monetary conditions, and prevailing valuations favour shares over bonds. This could prolong the positive trend – if not quite the trajectory of last year – and we remain cautiously optimistic as we begin the new decade.

 

Illustrative positioning relative to long-term neutral allocation

For more on these themes and our current positioning download the PDF.

 

Important information
Any research in this document has been procured and may have been acted upon by Close Brothers Asset Management for its own purposes. The information is being made available to you only incidentally. The views expressed herein do not constitute investment, taxation or any other advice and are subject to change. They do not necessarily reflect the views of any company in the Close Brothers Group or any part thereof and no assurances are made as to their accuracy. Investments may not be suitable for everyone. Past performance is not a reliable indicator of future results. The value of investments and the income from them may fall as well as rise and is not guaranteed. An investor may not get back the original amount invested. Unless otherwise indicated, all information and opinions expressed in this document are those of Close Brothers Asset Management and are correct as of February 2020.

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