Author Archive

The populist wave may be yet to peak

Populist parties have been on the rise in Western democracies in recent years. They have already achieved two landmark successes, with Brexit and Trump, and are threatening breakthroughs elsewhere. We see six main drivers of the populist surge: rising economic insecurity, globalisation, a technological innovation shock, cultural backlash, broader socio-economic change, and fragmentation of information […]

Macron victory still raises questions for markets

The first round of the French presidential election has come as a relief for markets as a pro-European, reformist candidate came first and now looks very likely to win the second round. For once, opinion polls were fairly accurate in capturing voting intentions and last-minute momentum. But the result of the first round is not […]

Reality check means markets face a pause

The first quarter was an exceptional one for risk assets—so exceptional that it is difficult to see how their performance can be repeated in the present quarter without some strong catalysts. According to our analysis, annualised returns on equities in the first quarter were up to three times higher than their historic average in the […]

Geopolitics and investing: assessing rising instability

We believe US-China competition will be the overriding geopolitical issue in the coming years. History suggests there is a strong chance that China’s rise will not be incorporated peacefully. Three forms of geopolitical competition between China and the US could dominate the next decade: over international governance, territorial dominance and supplies of raw materials. Along […]

UK’s Brexit vote to have wide repercussions, changes economic & market scenarios

Looking at the referendum result in terms of macroeconomics, financial markets and politics, our views are as follows: Macroeconomics. The vote for Brexit is, we believe, likely to reinforce a recent loss of momentum in parts of the UK economy. We believe the result of the referendum will hit consumer and business confidence, at least […]

Bond yields under pressure

Global bond yields have plunged to new lows in recent days, as markets have switched to ‘risk off’ mode. This is just the latest manifestation of a trend: sovereign bond yields have been under downwards pressure for several years. Central bank QE and economic uncertainty are partly to blame. But investors should remember that sovereign […]

Conditions are ripe for rebound on equity markets

On 26 January, we explained that we expected the turmoil on global equity markets to abate in the near future. Several of the possible triggers for a rebound on equity markets that we identified are now materialising: Policy support from central banks. The Bank of Japan (BoJ) unexpectedly announced last week that it is cutting interest rates […]

The reasons behind the turmoil on global markets

Equity markets have had their worst start to the year since 1897, following on from bouts of elevated volatility in 2015, and currency markets have also seen major disruption. But elevated market volatility this year was not unexpected and economic fundamentals are little changed. Conditions now look ripe for a rebound. What’s worrying markets? Recent market […]

US monetary policy: rate lift-off, finally, but the saga will continue

The Fed has finally moved interest rates up from their historic lows. Market reaction has been muted, since the much-trailed hike was fully priced in across asset classes. But, as we have long stressed, attention will now shift to the pace and timing of further tightening, which will create further market instability in 2016. After […]

2016 macroeconomic and strategic alternative scenarios

In the following post, we feature the conditions under which two alternative scenarios for 2016 , one positive and one negative, could materialize. Please see our “Macroeconomic and Strategic Scenario for 2016: Key takeaways” post for a detailed overview of our core forecasts.  Upside risks for a positive alternative scenario Greater acceleration of economic growth in Europe, […]

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