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Wealth Management: Market Perspective

A Christmas Carol: 2020

Kevin Gardiner and Victor Balfour, Global Investment Strategists

Foreword

As this year comes to a close, we are reminded that today's crisis is above all a public health emergency. While the economic consequences have no doubt been severe, as we have said before, this too shall pass. Hopes for a vaccine have now materialised in the UK, leading us to believe that economic recovery remains likely, and as we look beyond this unique year, we remain unconvinced that the world will change completely.

In this edition of Market Perspective, we look ahead and question how, or to what extent, we should revise our worldviews. Questioning how much more headroom stocks really have, we have reconsidered our approach to plausible returns to place more emphasis on the expectations embedded in markets and their implied forward rates. Although a rotation to more cyclical sectors and regions has led us to tilt our top-down advice slightly in their direction, we are not yet confident enough to bet on these 'new' winners or against the reigning champions. Meanwhile, with our currency convictions remaining low, we ask whether this is about to change, but reiterate that cryptocurrencies like bitcoin have no place in managed private client portfolios. But perhaps a bigger longer-term concern, we address the possible resurgence of inflation, the incline we still expect from today's levels, and how we might adapt to it.

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