Anthony Rayner

What V-shaped recovery?

Having had such a strong April, equity markets will no doubt need a bit of time to consolidate if they are to move higher from here. If indeed they are to move higher from here.

The combination of massive injections of liquidity into markets by central banks and better prospects for getting Covid-19 under control, with the related easing of lockdowns, have contributed to the biggest monthly rally in the S&P 500 Index since 1987. 

Is it worth fighting the Fed?

“Don’t fight the Fed” is an old adage, but why has it proved so durable? In part, it’s simply that it’s often right: if the US Federal Reserve is adding significant liquidity, then equities tend to respond positively. After all, investors, at least the long-only variety, want the Fed to win; even the bond vigilantes succumbed. So, other than fundamentals, which will likely be deteriorating around the time of any emergency Fed action, it seems that there is little to oppose the Fed.

Asset classes do not always follow the rules in a recession or recovery

Whether economies are moving towards a recession, or set to recover, has been the key question in markets for some time. It’s not just an academic question. It’s vitally important for portfolio construction, as assets can behave in quite opposite ways, depending on the answer.

Take equities, for example. In a slowing environment, outperformance tends to be driven by large-cap, quality-growth companies, while in a recovering economy, smaller-cap value companies tend to outperform.

Is it the end of the road for austerity?

The September meeting of the European Central Bank (ECB) was a bit of a non-event. What we found most interesting was not the announcements on monetary policy, but on fiscal policy, which is not typically the remit of central banks.

Not all bonds are the same. But are any of them safe havens?

Government bonds shouldn’t be considered a safe haven asset, says Anthony Rayner, manager of Miton’s multi asset fund range.

To say that not all bonds are the same is stating the obvious but to suggest that government bonds shouldn’t be considered a safe haven asset, is a little braver.

Will currency wars follow trade wars?

In response to a recent US announcement on new tariffs, the Chinese authorities allowed the renminbi to weaken above the symbolic 7, versus the US dollar. In turn, this led the US to label the Chinese as currency manipulators. These exchanges might sound like straightforward tit-for-tat, but we think that they raise the ante, which might mean some investors are too complacent.

Is diversification dead?

Is diversification dead? It’s a fair question. 2018 saw the vast majority of assets fall and, so far, 2019 has seen the vast majority of assets rise. To put some colour on this, Deutsche Bank analyse a broad range of risk-on and risk-off assets and in their sample (excluding currencies), 31 of the 38 assets made losses in local currency terms in 2018, while in the first half of 2019, 37 of the 38 assets made gains - silver being the only loser.

Strong rally in first half of 2019, but what’s ahead?

The first half of 2019 was unusual in that it was characterised by a strong rally that encompassed both risk-on and risk-off assets. However, this is very reminiscent of quantitative easing at its height, as the material driver of the cross-asset rally was central banks turning dovish in response to slowing economic growth.

Is a perfect storm brewing in markets?

Markets have been a bit jumpy in October and, as ever, investors have looked for a suitable rationale, ranging from trade wars and slowing economic indicators, to higher interest rates.

In this case, the most likely cause was higher US interest rates, which was the reason behind the sell-off at the beginning of the year.