Weatherproof Your Portfolio

In the face of late-cycle risks and more normal levels of volatility, a more selective, defensive approach may be required.

US: Investment driving strong momentum

Companies posted stellar Q1 2018 earnings, and there are growing signs that the immediate expensing provision in the US tax reform is indeed driving capital investment.

That strength has raised concerns of potential overheating in the US, given so much fiscal stimulus whilst employment is at a 17-year low. Yet recent language from the Federal Reserve seemed aimed at reassuring investors.

Inflation: Risks tempered by automation

Why have we not seen tighter labour markets leading to persistent wage and price inflation? Automation could explain it. There has been surprisingly fast uptake in certain areas, such as retail.

Outside the US: Watch for dollar and oil volatility

In other advanced economies, there have been signs of softening growth. Meanwhile, the emerging markets have faced the challenge of US dollar strength coupled with rising interest rates and higher oil prices.

How can investors position themselves against this backdrop? Read our CIO Letter to find out.



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