MARKETING - The PRIDE Magazine by Liontrust - Flipbook - Page 10
MAC R O A N A LY S I S
Liontrust’s Head of Multi-Asset John Husselbee – who invests in a range of funds across
regions and asset classes – analyses the big issues affecting investors this year.
that commentators have coined the term
Trumpflation. Many see this Trumpflation
as the force behind recent market highs,
but we believe the 45th President, his
policies, and the resulting market impact
are merely the culmination of a much
broader shift around the world.
JOHN HUSSELBEE
After the Brexit vote
and Donald Trump’s victory in 2016,
expecting the unexpected has become
part of political and financial life.
Yet in spite of doom-mongers predicting
economic collapse in the wake of these
events, many stock markets around the
world have hit all-time highs in recent
months. Meanwhile, despite intermittent
spikes – when Theresa May announced
the snap election for June and the shock
result which ensued, for example –
volatility also remains extremely low.
While plenty of uncertainty still surrounds
Trump’s policies, the direction of
travel is very much towards increased
spending and inflation – to the extent
10 - THE P R I DE - Issue 1 Winter 2017
Austerity has been in place for the best
part of a decade – since the global
financial crisis – but continued sluggish
economic growth shows this strategy
has had a limited impact at best.
Since the start of 2016, we have seen
a sea change in government policy,
acknowledging the long road of austerity
and printing money must come to an
end and a new approach is needed to
stimulate growth.
With a fresh impetus on governments to
lead by example and begin spending
again, we are moving from an era of
belt tightening to loosening, from lower
to higher growth, inflation and bond
yields – and Trump encapsulates this
reflationary ideal.
Meanwhile, we have also witnessed a
rise in populism and a reaction against
globalism – and, again, this finds its roots
in austerity. While living standards have
stagnated in recent years, limited food
price inflation and depressed oil prices
have allowed people, on the whole,
to get by. But with oil prices now rising
again, the cost of living is increasing
and the populist votes of 2016 are an
obvious barometer of discontent.
...printing money must
come to an end and a
new approach is needed
to stimulate growth.
So how can investors take advantage of
current conditions?
There are obvious concerns about Trump
and the reality of Brexit, and we will have
to wait to see how these play out. One
point I’m keen to make in this waiting
period, though, is that while political
and economic twists and turns can cause
havoc for short-term speculators, these
events create opportunities for long-term
patient investors like us.