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4 November 2016

BOE: Bank on track.

Today’s BOE decision represents a correction in UK policy makers’ thinking. The sudden stop in activity which was implied by the Bank’s August stimulus package has not materialised and the focus has instead returned to significantly above-target inflation by 2018. This is going to be supportive of sterling, especially as consensus views on the exchange rate had become so negative.

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31 October 2016

BOE leadership: Carney’s conundrum.

Mark Carney’s testimony to the UK’s House of Lords economic affairs committee was notable both in regard to his personal intentions and the future interaction between fiscal and monetary policy. In respect of the former, his emphasis on personal circumstances in terms of whether he wished to serve a full 8 year term at times felt uncomfortably close to sounding as if he wished to spend more time with his family. Even if this may have been unintentional it has contributed to the speculation over his future.

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1 September 2016

UK economy and corporate profits: Refusing to follow forecasts.

Since July, there have been over 250 UK corporate earnings reports or trading statements, which we have been tracking for any sign of Brexit-related weakness. Within these corporate filings we can find little evidence, in either outlook statements or in managements’ referendum commentary, to suggest a slowdown in trading is underway.

On the contrary, over 80% of company earnings reports indicate that trading is in-line with earlier expectations. Furthermore, 16% of companies report that trading is ahead of expectations against only 3% reporting that trading has fallen below expectations. In addition, recent data on house prices and manufacturing surveys seem to confirm that fears of a Brexit-induced slowdown in the UK have proved overblown, over the summer at least.

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RSS - Strategic Insight
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*Multiple Sectors
31/01/2019
Equity strategy and market outlook

In this month’s strategy piece, Alastair George believes that investors should avoid the temptation to sit back and spectate in Q119 as a prudent degree of risk-taking may be a better strategy. Valuations now offer a more attractive entry point for both developed and emerging equities while US monetary policy has largely normalised and US interest rate increases are now on pause. For US/China trade, a truce in 2019 could clear the way for Trump’s re-election in 2020 while in the UK, the chances of a delay or revocation of Article 50 are rising faster than that of a chaotic no-deal Brexit. Sharply declining survey data and continuing profits downgrades (even if profits growth still remains positive) are, however, two key counter points to the bullish argument. Nevertheless, a major slowdown in 2019 remains less probable than a soft landing at this point and global equity allocations should be at least at neutral rather than cautious, in his view. The strategy report was originally published on 17 January and has been updated to reflect recent market developments.

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