This issue of Hub News comes at an inflection point in the market. The surprise election of Donald Trump has proved a catalyst for a sell-off in fixed income markets and the so-called ‘bond proxies’ have finally seen their armour dented. Inflationary pressures are re-emerging.
The more pessimistic of market-watchers have labelled it the ‘Icarus trade’. Certainly markets appear to be expecting a Goldilocks scenario for the global economy, neither too hot, nor too cold, where the US administration delivers seamlessly on its electoral promises and the rest of the world continues to grow.
This optimistic scenario is vulnerable. To date, President Trump has delivered on the more negative aspects on his policy agenda such as greater protectionism, while remaining relatively quiet on more pro-growth areas such as tax cuts. There is the potential for considerable political disruption in Europe, and the UK still has its Brexit negotiations ahead.
It seems likely that the benign markets that we have enjoyed for the past five years will experience some wobbles, but there will always be opportunities amid the turmoil. This month’s magazine has a firmly multi-asset theme: in an uncertain world, effective diversification could be an investor’s best friend.
Baillie Gifford’s Tom Slater considers the outlook for the US under the new administration, while M&G’s Jim Leaviss talks about why an absolute return approach may work better in today’s fixed income markets. GSAM’s Luke Barrs looks at how emerging markets may fare.
These are interesting times and we hope the magazine gives some insight to help you navigate this complex environment. As always, we welcome your feedback, so please send any thoughts or questions to firstname.lastname@example.org
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