Rothschild Private Wealth: Market Perspective – The birthday party | Pessimism is not profundity (English)
Kevin Gardiner, Global Investment Strategist, Rothschild Wealth Management
Happy birthday to the US recovery, nine years old this month!
The birthday party will be a subdued affair. This must be one of the most unloved business cycles ever. Its meaning, its seemingly sinister characters, and its inevitable pauses, have been as critically dissected as a Pinter play. Many pundits will not want to celebrate a recovery they said wouldn't happen, or would quickly lapse into a double dip, or would implode on the first rate rise at the Fed.
Potential festivities will be further overshadowed by renewed geopolitical concerns. These include an unorthodox new government in Italy, unscheduled elections in Spain, a seeming impasse on Brexit and of course the ongoing risks posed by an idiosyncratic US administration - not least the dangerous sparring over tariffs. Meanwhile, the stress points in an ever-tense Middle East seem to be shifting anew.
But as the US upswing enters its tenth year - just over a year away from perhaps becoming the longest ever - it shows few signs of overheating, and still has gas in the tank. Those geopolitical risks are neither new, nor as one-sided as many take them to be: they may prove manageable.
Commentators on current affairs often assume the worst. But secular stagnation, trade war, strife in the Korean peninsula and the death of democracy (the most recent addition to the wall of worry) are not inevitable. As Steven Pinker says, let's not confuse pessimism with profundity.
With the next US recession and/or financial crisis still not visible on the horizon, we continue to see the investment climate as a constructive one. We advocate ongoing portfolio protection, not a more significant defensive restructuring.
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