This note looks at the long de-rating of equities relative to gilts and examines the likely trends from here. Equity income over the last decade has grown steadily, despite all the problems the financial sectors have seen. It is 28% higher in absolute terms than it was in 2008. The outlook over the next couple of years is more troubled given risk to oil and mining income. However even on a worst case scenario (far worse than we expect) the real income return exceeds 3% with a re-based level of growth. It screens for secure growing income. Please contact us for a copy.
The issue is dominating client meetings and a number of high profile reports have been written predicting that sun will cease to shine should the UK vote to leave. This report takes a more optimistic view of the UK's long term prospects. We examine the legal arrangements for leaving. We believe divorce would be one of evolution not revolution, given a) the likely legal time-scale to withdrawal b) legal obligations covering treaty law under the Vienna Convention c) the probable gradualist approach to amending EU directives.
Yesterday's budget was perhaps more placid than feared, although the trend to micro management continued. £70bn is still too much to borrow at this stage of the cycle. The UK remain's poorly positioned should there be a shock (not our core view). If you would like a copy of the report please contact us.
The last few years have been a triumph of hope over reality for expected earnings growth as forecasts have tended to wither over each year. For example over the last six months FTSE 350 forecasts have in aggregate subsided by around 5%. However there are signs that this trend is now reversing. This note examines the outlook for earnings in 2016 and 2017 and tries to anticipate where the risk to consensus forecasts lies, either on the upside or downside.
Please contact us for a copy of this note.
This note looks at where the marginal net buying for equities may come from. We explore the changing nature of equity ownership and how this might impact volatility. We look at the impact of the collapse in commodity prices has had on sovereign wealth funds and conclude that a material risk to markets, for the West at least, comes from very poor fund flows. We are probably more optimistic on the Western economic outlook than consensus, but it is not obvious where the net new buyers come from. Please contact us for a copy.