never say never again - MAS 13-12-16

Never say never again

Articles | 13 December 2016

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As we approach the end of 2016, the forces shaping the global outlook continue to be macro-economic themes, such as an impending Brexit, China’s ongoing rebalancing and more recently of course, the result of the US presidential election.

Looking ahead to 2017, we have a number of political decisions in Europe, such as the French and German elections, ensuring a dark cloud remains over the region with politics continuing to have a large influence on markets.

Against this political backdrop we have a US equity market attempting to grind higher and global bonds valuations retracing since the last semi-annual review. In the lead up to the US election, sentiment to emerging economies had improved on\ mildly favorable macroeconomic news and some recovery in commodity prices. However, rising US yields and their support to the US dollar will create more uncertainty and volatility for these developing nations.

Before considering the markets and positioning in more detail, we will first summarise the current macro themes shaping the economic climate.

For several decades the world has looked to the US for stability and order. Following the ‘surprise’ election result that had the prevailing politicians and pollsters aghast at hearing the words, ‘President-elect Trump’, gives a sense that the stability we have come to expect from the US can no longer be assured.

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