We have published an update on the state of the negotiations with a broadly positive prognosis for a positive conclusion. Some micro risks remain, notably in the food and beverage sectors and services generally but don't see BREXIT as a material market risk.
We have published out outlook paper for Q2 titles 'Setback provides opportunity' outlining the prospects for markets going forward. Despite multiple risks we believe the recent sell off provides an opportunity and would overweight equities, particularly in the UK and Eurozone.
This note examines the outlook for UK equity income. We see headline growth slowing to just 2.2% in 2018. However the underlying picture is stronger after stripping out the impact of recent sterling strength. The note attached below examines the greatest threat, in our view, to equity markets, normalising bond yields, but conclude the underlying trends are quite different between the US and the UK and Eurozone. The price of money in the UK and the debt equity arbitrage remains largely intact.
This paper is a thematic piece looking at the long term impact of demographic change. While the short term implications are perhaps marginal current trends suggest the world will be a very different place in a generation with significant implications for Western growth and geopolitical stability. For example wider Europe's share of global population has fallen from 21.7% in 1950 to 9.9% today. The decline is embedded. By contrast Africa's population has increased six fold since 1950, with a current average age of 19. Its 1950 8.1% share is 16.4% today and projected to be 25% by 2050.
The Italian Elections on March 4th are worth watching out for for two principle reasons; possible instability in Italian sovereign bond yields and also a test case for a possible end to austerity for a highly public indebted nation. The election results are likely to be inconclusive and garnering a coalition may be difficult given differing agendas and personalities but polling suggests there is a loose populist majority between the Five Start Movement, Berlusconi's Forza Italy and the Northern League may occur.