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Investment strategies

Soft landing?

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If the US does have a soft landing it would be because the Federal Reserve tightened enough to slow inflation, but not enough to throw the economy into recession. In our opinion, Fed policy should not be measured using interest rates alone. The Fed held the federal funds rate at 0% from 2008 to 2015 without inflation. During COVID, the Fed held the funds rate at zero for … [Read more...] about Soft landing?

Investment themes for 2023

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Most investors will be glad to see the back of 2022. It was a grim year for both bonds and equities. A number of the themes that have defined markets in the past year are likely to continue in the year ahead – the relative weakness of technology, for example, the dominance of value and dividend stocks – but there will be differences too; the revival of Asian markets, or the … [Read more...] about Investment themes for 2023

Transitory tightening?

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Bond investors have started the new year on a very upbeat tone. They seem convinced that the battle against inflation has already been won. The Federal Reserve (Fed) might nudge rates up a bit more to stay on the safe side, but soon enough we’ll go back to a world of very low interest rates—this seems to be the consensus view based on the price action. The encouraging US … [Read more...] about Transitory tightening?

Global ‘Savings Glut’ continues to drive down the return on capital….

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At over 4% of GDP, the US international borrowing requirement remains significant. Many observers attribute the imbalance to a lack of US savings but then find it hard to explain why the return on US capital is has not risen so as to encourage higher saving domestically. In fact, the return on US capital has fallen significantly in recent decades, having peaked in the early … [Read more...] about Global ‘Savings Glut’ continues to drive down the return on capital….

Not another inflation article

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When can bad news be good news? It is no mystery as to why we have seen rates increase so much over the course of 2022. For many investors this has meant intense focus and scrutiny on monetary policy in order to gauge short term market sentiment. In the long term however, higher rates will mean a fundamental change to the market dynamics investors have been used to for the … [Read more...] about Not another inflation article