“Kings are not born: they are made by universal hallucination.”
George Bernard Shaw (1856 – 1950)
Caroline Shaw, Courtiers Head of Fund & Asset Management, was invited to speak on a panel this morning at the Portfolio Adviser Autumn Congress (#PACongress16) to debate the question, “Is Macro Still King?”
Caroline’s key points were covered as follows:
US Core Inflation
- Above 2% and has been for a year.
- CPI (consumer price index, without food and energy) will revert to that level.
- Inflation will not stay low.
- Interest rates will rise in the US.
US household net wealth (assets minus liabilities)
- Currently at an all-time high.
- US government debt is high but US household net wealth is much, much higher.
- Look at assets as well as debt.
Bonds
- Not a low risk asset in the current environment.
- 10 year bond yields in Germany, Switzerland, Netherlands and Japan are negative.
- Equity dividends look a better prospect.
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