Pundits have been saying that we’re in the “late cycle” for five years or more but markets have raced away, continuing the bull market that has been taking place for the best part of a decade.
View of the Day
The holiday season is typically a positive time of year for US markets. However, there are reasons to be cautious. What can investors expect from US markets and the economy as we move into 2020? Here are several viewpoints.
The British high street has been hit by the perfect storm and the rise of online shopping coupled with increased rents and business rates have taken their toll on a once fundamental part of British life.
“Japanisation” might soon afflict Europe and the US. It describes a stagnating economy that goes down a deflationary spiral with almost no demand for credit or consumption from the private sector. No growth and no inflation.
Value index funds have a fundamental flaw.
This flaw is not in the principles of “value investing”. Those are sound, and trace back to at least 1934, when two of the first value investors, Benjamin Graham and David Dodd, wrote that investors should “be concerned with the intrinsic value of the security [stock] and…discrepancies between the intrinsic value and the market price”.
The chart below frightens people: after such sustained performance, is the tech sector about to collapse? I am regularly asked “Aren’t we in another tech bubble?”
Seven years ago, Shinzō Abe assumed leadership of a country burdened by stagnant economic growth, unfavourable population dynamics and a mountain of debt. He adopted a “three arrows” approach – dubbed Abenomics – to counter these trends, centred on loose monetary policy, fiscal stimulus, and structural reform.
A natural and intended consequence of quantitative easing following the global financial crisis has been the reflation of asset prices. Trough to peak, the global equity market has climbed 210% and the S&P 500 has risen by an extraordinary 350%.
The central banks of the world are keen to boost economies. Many are using the scope of falling US interest rates to do something similar themselves. Some are worried about the lack of money in the markets, and are taking action to boost liquidity. Some are concerned about a low rate of new borrowing reflecting poor rates of capital investment. They are making more money available on easier terms for lending.
The German economy grew at its slowest annual rate between August 2018 and July 2019 since the depth of the 2011 euro crisis.