Expecting strong growth and contained inflation over the near term, we see a gradual path to central bank normalization. If inflation picks up, our outlook could change. Among our best ideas: European bank capital, U.S. high yield, securitized credit.
Amid strong growth and modest inflation, it’s a good environment for taking risk. But it is late cycle-no time for complacency. We take U.S. high yield down to neutral, keep a broad regional diversification in equities and a small underweight to duration.
This paper, written by Ian Hui, addresses MSCI's announcement of delaying the inclusion of China A shares in their benchmark Emerging Markets Index and discusses the relevant implications.
Chief Market Strategist Stephanie Flanders discusses Britain's place in the EU and the pre-referendum landscape and despite of how a vote in favor of remaining in the European Union is probable, a “no” vote in the coming UK referendum is a distinct possibility and is something investors should be prepared for.
And what if Britain does votes to leave? Short-term economic and market impact and longer-term consequences are also discussed. But the transition to a new set of arrangements would be messy and potentially very costly, not just for the UK but also its closest trading partners.
Despite setting a lower GDP target, we believe growth is still the top priority for China this year, as both monetary and fiscal policies will be supportive of growth.
The government reiterated its plan to accelerate the urbanization process as labor market conditions remain favorable, which is a much needed step in reducing the level of housing stock. China will continue to push through its supply side, state-owned enterprise and financial reforms, albeit at a slow pace.
The next five years are crucial for China to avoid falling into the “middle-income trap,” suggesting why this year’s policy maintains an appropriate expansion of aggregate demand. However, ignoring the excessive pace of debt accumulation may likely bring negative consequences to the real economy in the long term.
(All sites are in English)