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Every quarter, we survey around 100 of our Wellington colleagues in different investment disciplines and locations to get their views on what we see as the key macro questions of the day.

We believe that the framing of the questions is crucial. For example, many surveys ask respondents to list what they see as the current key risks. In our survey, we ask for the top three risks our participants believe the market is most complacent about. That requires them first to think about the risks — which are often fairly evident — and then to grade them on how far they are priced into markets. For us as investors, that is clearly the more important information, as it can help us to identify areas where the markets are mispricing risk and thus creating…

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Jens Larsen headshot
Jens Larsen
PhD
Macro Strategist
London
Benjamin Cooper
Ben Cooper
CFA
Multi-Asset Strategist
London

Our view: No

  • We expect market direction going forward to be driven by the tension between accommodative central banks on one side, versus economic and trade policy uncertainties on the other.
  • There is a risk that global trade policy could adversely impact business confidence, capital investment, and ultimately, employment, potentially leading to a slowdown in economic growth.
  • We believe a resolution of trade policy uncertainty would create the potential for an economic rebound, given continued resilience in consumer confidence (Figure 1).

Figure 1

Global industrial and consumer confidence

Bottom line: While central bank influence on company fundamentals will be limited, we believe the credit cycle can be sustained in the absence of a recession.

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Michael Taylor
Michael Taylor
Associate Director of IPS
Boston
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