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A bit directionless?

Date: 26/11/2018
Category:

It all feels a bit directionless.  Despite the ongoing noise around Brexit, there is actually little news of any great import.  In terms of equity markets, the catalyst for them to move higher is difficult to pinpoint.  After October’s pull back, early November’s rally and retrenchment leaves us pretty much back where we were.  And, according to Bloomberg, that is a fall of some USD3 trillion on US equity values alone since September.  Was the November rally a dead cat bounce?  Despite the increasing note of wariness that has crept into our views of markets over recent months, we don’t think so.

So what is propping up our outlook?  Well it’s not serendipity.  It is simply the basic economic situation.  We accept the cycle is long in the tooth but the global economy is still growing.  Turning to Bloomberg again, their U.S. Recession Probability Forecast index reports a 15% probability of recession next year – or, to put it the other way round, an 85% probability of no recession.  Whilst the world’s economies grow, then the opportunity for corporate profits to grow remains.  That, in turn, should allow equity markets to return to an upward trajectory.  Albeit it a modest one. 

Undoubtedly, some investors are nervous – some are very nervous indeed.  That is neither unusual, nor is it a bad thing.  It does no harm to be reminded of the pitfalls of charging into a bear market whilst fully invested.  But we aren’t.  We had already de-risked and have been mindful of the potential for pullbacks for some time.  So, whilst we are as prepared as we can be for tricky times ahead, we are also not panicking.  We retain a more positive view than most and maintain our existing equity positions whilst remaining ever watchful.

Regulatory notice

This message may contain information that is confidential or privileged. If you are not the intended recipient, please advise the sender immediately and delete this message. KW, KW Wealth, KW Protect, KW Wellbeing, KW Institutional, KW Partner and KW Private Office are trading names of KW Wealth Planning Limited (registered number 01265376), KW Investment Management Limited (registered number 06931664 ) and KW Trading Services Limited (registered number 03109469) which is a member of the London Stock Exchange.  Each of these companies is authorised and regulated by the Financial Conduct Authority and has its registered office at 13 Austin Friars London EC2N 2HE. KW investment Management Limited is also regulated in South Africa by Financial Sector Conduct Authority.  All these companies are wholly owned subsidiaries of Kingswood Holdings Limited (registered number 42316) which is incorporated in Guernsey with registered office at Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WW.

Risk warnings

This message is not to be construed as a solicitation or offer to buy or sell securities and does not in any way constitute investment advice, nor should it be used as the basis for any investment decision. The information contained in this message has been prepared using all reasonable care. However, it is not guaranteed as to its accuracy, and it is published solely for information purposes. Our opinions are subject to change without notice and we are not under any obligation to update or keep this information current. The investments discussed in this message may not be suitable for all investors. KW Wealth does not guarantee the performance of any investments.  Past performance is not necessarily a guide to future performance. The value of investments may go up or down and you may not get back the amount you have invested. The income from an investment is not fixed and may fluctuate. The value of an investment involving exposure to foreign currencies can be affected by exchange rate movements which may cause the value of the investment to go up or down. KW Wealth and/or its affiliated companies and/or their employees may, from time to time, hold shares or holdings in the securities discussed in this message and may as agent buy or sell those securities.

Restricted investors

This document is not, and under no circumstances is to be construed as, an advertisement, or any other step in furtherance of a public offering of shares in the United States or Canada.  This document is not aimed at persons who are resident in the United States, Canada or any province or territory thereof, nor any other jurisdiction where such distribution would be contrary to applicable law or regulation.

The value of investments and any income from them can fall and you may get back less than you invested. KW, KW Wealth, KW Protect, KW Wellbeing, KW Institutional, KW Partner and KW Private Office are trading names of KW Wealth Planning Limited (registered number 01265376), KW Investment Management Limited (registered number 06931664 ) and KW Trading Services Limited (registered number 03109469) which is a member of the London Stock Exchange. Each of these companies is authorised and regulated by the Financial Conduct Authority and has its registered office at 13 Austin Friars London EC2N 2HE. KW investment Management Limited is also regulated in South Africa by Financial Sector Conduct Authority. All these companies are wholly owned subsidiaries of Kingswood Holdings Limited (registered number 42316) which is incorporated in Guernsey with registered office at Regency Court, Glategny Esplanade, St Peter Port, Guernsey, GY1 1WW.