- Britain’s annual inflation rate surprised markets in June, coming in at 2.6%, as opposed to the expected 3%. The lower inflation will now ease pressure on the BoE to consider raising their key interest rate.
- The S&P500 technology sector has now reached an all-time high, 17 years on from its last peak seen during the “dotcom bubble”. Market commentators have sighted that although we have surpassed this peak, earnings are now a lot stronger than in 2000, with the current P/E ratio of this sector standing at 24x versus a P/E ratio high in 2000 of 73x.
- The UK government announced plans to extend the retirement age from 67 to 68. The aim is to implement this change from 2037, seven years earlier than previously expected. This potential change would affect anyone currently aged 47 or younger, meaning they will have to work an extra year before being able to claim a state pension.
- At the latest meeting of the ECB its president, Mario Draghi struck a dovish tone hinting at a continued commitment to quantitative easing if need be. Despite this, the Euro ended over $1.16 versus the US dollar, for the first time since August 2015.
- On Wednesday 26 July we have the release of UK QoQ GDP with market expectations at 0.3% versus prior 0.2%.
- On Wednesday 26 July we have the FOMC US rate decision with futures markets pricing in a 99.9% probability of no change and for the key rate to remain at 1.25%.
A score of -1.0 indicates an extremely poor economic outlook, which is accompanied by a high probability of negative returns in risky asset classes like equities. The Risk Barometer tilts our portfolios away from equities during such periods.
A score of 0 indicates a neutral economic outlook with almost equal probability of positive and negative returns in risky asset classes like equities. The Risk Barometer maintains a balance between equities and other asset classes during such periods.
A score of +1.0 indicates an extremely positive economic outlook, which is accompanied by a high probability of positive returns in risky asset classes like equities. The Risk Barometer tilts our portfolios towards equities during such periods.
*as at latest realignment 17/07/17
The performance of each asset class is represented by certain Exchange Traded Funds available to UK investors and expressed in GBP terms selected by Copia Capital Management to represent that asset class, as reported at previous Thursday 4:30pm UK close. Reference to a particular asset class does not represent a recommendation to seek exposure to that asset class. This information is included for comparison purposes for the period stated, but is not an indicator of potential maximum loss for other periods or in the future.