Macro Matters is a global investment blog brought to you by LGIM’s Asset Allocation team. We’re focused on sharing our most compelling thinking to help you become more informed investors.
Evolutionary psychology highlights a Stone Age mentality hardwired into our brains and reflected in our behaviour and habits. For example, we tend to organise ourselves into groups in order to adapt more easily to different environments: behaviourally it is far less dangerous to be wrong in a group than to be right on our own. This explains the desire and impulse of an individual investor to follow the crowd.
Remember the EU referendum? The City thought the British public would see the economic benefits of EU membership and not wish to loosen ties with our closest trading partners. Turns out the City was wrong and had misread the mood of the nation. The current discussion around nationalisation has some worrying similarities, so is the City making the same mistake again?
How does the potential trade war look from China’s angle? Although a full-blown trade war between the US and China is not our base case, there is still a lot to consider. The macro impact currently appears to be very manageable, although even if it all blows over, we observe a tectonic shift in the US-Sino relationship.