Wealth Management: Market Perspective – Growth insurance - or inflation pass?: Foreword (en anglais uniquement)
Kevin Gardiner, Global Investment Strategist, Wealth Management
The US upswing enjoyed its 10th birthday in June, and in July seems set to become the longest ever.
It is not the biggest. And as we have noted often, it is far from the most popular. But it may be one of the best-behaved - which is why we've given it the benefit of the doubt for so long.
The most pressing threat to an 11th birthday - apart from simple old age - may be the re-escalation of US-China trade tensions. We can still imagine a constructive outcome, even now, but as the 2020 hustings loom so too does the potential for White House brinkmanship (not forgetting that China, not the US, benefits most from the current, far-from-level playing field - Mr Trump has a point, albeit an undiplomatic one).
By contrast, the conventional cycle killer - a surge in inflation and interest rates - seems much less of a threat. Both inflation and monetary policy are currently on the back foot - not just in the US, but globally. In this Market Perspective we discuss why this might be, and what it could mean.
Big economy inflation has in fact been pretty quiescent for a quarter of a century. We also forget that chronically bad inflation - as opposed to the occasional but thankfully rare hyperinflation - was, like chronically bad fashion, largely a child of the seventies. But as we suggest below, if we only view the economy with inflation-shaped spectacles, inflation tends to be what we see.
We're not about to run off with the bond market. But we are keeping a more open mind about where growth comes from - and what that means for inflation, interest rates and portfolios.
Market Perspective will next be published in September.
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In this Market Perspective:
Download the full Market Perspective in PDF format (PDF 3.92MB)
German version: Marktausblick - Wachstumsversicherung - oder Inflationstoleranz? (PDF 1.6 MB)
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