10 November 2016

Trump's double surprise.

It is quite clear that in the days leading up to the U.S. Presidential election, both markets and surveys got it wrong. Traditional polling once again failed to spot the depth of support for radical political change. This was after all the U.S., which has delivered the strongest post-crisis economic performance of any developed nation. 

RSS - Strategic Insight
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*Multiple Sectors
Illumination: Equity strategy and market outlook

In this month’s strategy piece, Alastair George highlights that the standout market event during February was the discontinuity in equity market volatility. In his view, renormalisation of monetary policy will over time have a much broader impact on asset prices. In particular, this volatility episode adds to the weight of evidence that market risk premia will also revert back to more normal levels as interest rates rise. There has, however, been no evidence in recent weeks that economic fundamentals are weakening. While recognising the growth dynamic is strong for the moment, he continues to believe equity portfolios should now be tilted towards sectors that have offered a degree of resilience. Bond yields may have risen substantially since he highlighted anomalously low yields in December, but on balance the risks still appear to the upside.

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