Knowledge and insight

Global equities shrugged off some bad news to post remarkable gains in the first quarter. Julian Chillingworth, our chief investment officer, thinks it’s time to shuffle toward the exit – but not too fast.

The party goes on; just jazz, not rock and roll 

As the joke goes, an inverted yield curve has predicted 11 of the past nine recessions. Its traditionally one of the most reliable harbingers of economic recession but a closer look at timings show that its use is limited. Over the past 50 years, the number of months from inversion (defined here as 1-year US Treasury yields surpassing 10-year yields) to recession has ranged from seven up to 24, averaging 14. So, an inverted yield curve has proved to be a reliable indication of recession, but not its timing.

Given the potential of ISAs to provide tax-efficient gains that compound over time, it makes sense to invest earlier in the year. Doing so could mean greater growth in your portfolio and allow you to reach your investment goals sooner.

A logjam in the streets and another in Parliament. Our chief investment officer, Julian Chillingworth, ponders a hectic week ahead.

Unfortunately for us, this decimation in the standard of living is unique to the UK. Not only have real wages struggled since 2008, we now have the poorest rate of social mobility of any advanced major economy. Our future is uncertain, and that can’t just be blamed on Brexit. Edward Smith, Rathbones’ head of asset allocation research, discussed his concerns about our small but troubled economy and considered our future at our annual investment conference. 

“It’s just a flesh wound.”

In some ways, retail is going through a similar transformation to that of the auto industry, when greater automation and systems seeped into manufacturing decades ago. Nowadays, retail shopping is less about swamping high streets with clothes or sofas in every size and colour. Far better to save your property budget for creating a huge and efficient logistics network to deliver what consumers want, to their door, overnight. In this just-in-time environment, quality data is pivotal. But, very few companies have it, and they tend to reside in Silicon Valley.

You could hear the crack of the starting gun echoing around the markets last week: the race for the 2020 Democratic presidential candidacy is on and American equities dipped noticeably. And the leading message from those leading the Democratic pack is that capitalism itself is broken and needs radical reform.