Rothschild Private Wealth: Market Perspective – April 2018 (English only)
Kevin Gardiner, Global Investment Strategist, Rothschild Wealth Management
Sometimes it seems to be one thing after another. No sooner have European electoral risks and Korean tensions subsided than worries about a trade war and diplomatic stresses with Russia have taken their place. Inflation risk has fallen back (again), but some technology business models are suddenly looking less sustainable.
This makes it all the more important to try to keep things in perspective. The background for these developments has been a combination of solid economic growth with subdued inflation - a lengthy business cycle with few of the traditional excesses.
This is delivering increasingly full employment and ongoing growth in corporate profits, but so far only modest interest rate risk. Average stock market valuations are not cheap, but neither are they irrationally exuberant - even in technology.
On the subject of trade, China, not the US, is the most protected big economy. China's awareness of this is likely colouring its so far measured response to higher US tariffs.
Overall, we see recent news as again contributing to an overdue revival in short-term volatility, but not yet heralding a significantly more testing investment climate.
In the second essay we try to answer a question we've been asked often of late, namely: how do we reconcile this constructive macro view with such an unequal society?
For the full analysis, download the Market Perspective (PDF 986 KB)