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Stormy times

Date: 17/12/2018
Category:

Equities continue their rollercoaster ride, starting last week on a sweet note but ending it on a sour one and finishing down slightly over the week as a whole. The market worry that a global recession might be looming was fuelled by a spate of weak economic numbers from the UK, Europe, Japan and China which followed downbeat comments from the IMF. Some comfort, however, was drawn from the US where the indefatigable American consumer came to the rescue with some strong retail sales numbers.

We continue to believe that while a recession is very likely within the next couple of years, there is no obvious trigger for an imminent one. But economists are famously bad for forecasting recessions, so this is reassuring only up to a point.

The US-China trade conflict, where there is currently a 3-month ceasefire, remains a central concern and poses one of the bigger threats to global growth. Sentiment on this front continues to fluctuate hugely but took a turn for the better last week with talk of China cutting tariffs on auto imports and restarting soya imports.

Encouraged by the downbeat data of late and the absence so far of the usual Santa rally, the perennial doomsters are becoming more strident once again in their warnings.  While we fully acknowledge the risks have risen and we are nearing the end of the cycle, we do not believe it is time to panic.

Markets are already down 10-15% from their highs and discounting a fair amount of bad news. Undoubtedly, if we are heading into another full-blown crisis, markets could fall much further - but that is not our view. We remain comfortable with our positioning – a sizeable underweight of both equities generally and the UK relative to the rest of the world - which leaves us with some risk on the table but considerably less than we had at the start of the year.

This coming week, our hope is that Santa will finally make an appearance or if not the Federal Reserve will at least soothe rather than exacerbate market nerves at its forthcoming meeting

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.

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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.