New Political Paradigm

Economics

Car-ry on spending?

Just like cars, it costs more to maintain an older person than a younger one. Government borrowing could rise by 3% of GDP over the next 20 years as a result of ageing. To offset this, the UK government has squeezed the rest of the public sector in an attempt to balance the books. This seems politically unsustainable. Is the government about to reverse course by ending public sector pay caps?

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Macrobites

Fast forward one year ... the market impact of the Brexit vote

Sterling-based investors face the additional uncertainty caused by the Brexit vote alongside the usual vagaries in markets. When in doubt, it can be tempting to extrapolate recent performance, however today that could prove unwise. 

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Portfolio Thinking

Summer Viewing

If 2016 was the financial market equivalent of gripping TV drama with surprise plot twists, 2017 has been the year of test pattern TV. So far in 2017, worries about North Korea, the French elections, or President Trump-related developments have only had short-lived and localised impacts on markets. So is there anything we need to be watching this summer?

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Strategy

Trump today, Trump tomorrow?

Impeachment talk is nothing new in Washington. It’s difficult to think of any US President in recent times where some part of the political spectrum has not been calling for impeachment. Yet, US impeachment talk has gained unusual momentum in recent weeks, making it a scenario worth thinking through for investors. Here are nine questions and nine answers.

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Economics

Inflation rhymes

Inflationary disappointment doesn’t repeat itself, but it does rhyme. Alongside our new political paradigm, we see the search for inflation as a key driver for central bank policy and markets for the rest of 2017. I tie those two market themes together using the title from one of my favourite songs, only for host Mark Barton to catch me out by revealing the hidden link live on air.

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Strategy

Populist allocation

The French have elected an establishment President - surely this marks the end of road of the Political Paradigm? Far from it! More than 45% of French voters cast their ballot for a populist in the first round, more than ever before. In part 3 of this blog series I look at how the theme impacts financial markets and asset prices.

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Macrobites

Le Pen is mightier than the sword, but not Emmanuel Macron

In a largely anticipated result, Emmanuel Macron has won the French presidential election. The contest has been one of the most closely watched political and market-relevant events in Europe, and the most hotly contested French election in recent history. But with a winning margin of 66% vs Marine Le Pen’s 34%, Macron’s victory is decisive. Turnout was low by French standards at 74%.

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