It is often overlooked and due to its elusive nature, there is no standardized way to judge someone’s character. The topic rarely appears in textbooks or professional courses, and investors are generally skeptical about their ability to asses it. Which leads to the following question: Is it knowable? In other words, is there some reliable way to judge someone’s character?
On 3 April, we held our monthly Investment Committee meeting. Only three weeks after the previous one – three weeks that were tightly packed with issues, as we can see in the performance data of the most important asset classes. Equities and high-yield bonds have lost value, whereas Eurozone government bonds and emerging markets bonds have recorded gains. An upside-down scenario, compared to previous months.
The most important central bank of the world, the US Fed, increased the Fed funds rate on 21 March and also published projections for economic key indicators. Even though this does not sound like much, the implications for the markets are significant.
On 14 March our Investment Committee met, and as always, we started out on a discussion of our risk stance, i.e. our risk assessment. From my point of view, four findings of the discussion are worth bringing up here:
The announcement by the US President, Donald Trump, to levy import tariffs on steel (25%) and aluminium (10%) has made waves. Can the favourable economic environment be toppled an will we see a trade war between the US and the EU?
The economic environment for Italy remains challenging. The fundamental problem is the low economic growth. Although the composition of the future government is still unclear, the party programs imply a persistent reform deadlock.
The economic environment for the capital markets is subject to change as we speak. About one and a half years ago, the global economy shifted from recovery to boom, which was very advantageous for the markets. The features were strong, broadly based economic growth, low inflation, very supportive monetary policies, good earnings growth, and limited price fluctuations on the markets. We have now started leaving this best of all worlds (“Goldilocks scenario”) in more and more categories.
The BBVA Latin American Local Markets Conference in London gave Christian Gaier, senior fund manager of government bonds of emerging markets, the chance to talk to local Latin American representatives. In our blog he shares some of the insights he gained and the narratives that may affect 2018.
The year 2018 had started on such a promising note – is what we all were thinking. But at the beginning of February, the market taught us a lesson. As a result, the discussions at our first Investment Committee of the year at the beginning of February were interesting ones.
There are many factors that may affect inflation. Also, the weights of certain factors may vary across countries. Take the development of the exchange rate, for example.
