Commentaries

The quarter was marked by supply chain disruption throughout the global economy and volatile movements in bond yields driven by shifting inflation expectations

Asset markets remain fully valued on almost all historic metrics unless one believes that interest rate suppression is now a permanently embedded feature of the global economy

Our view, expressed last quarter, is that asset markets are fully valued on almost all historic metrics unless one believes that interest rate suppression is now a permanently embedded feature of the global economy

At the beginning of 2020 we considered that asset markets were underpinned not by valuation but by the promise of fiscal and monetary policy support. This support stemmed partly from the forthcoming US presidential election in November 2020 and partly because of a gradual evolution since the global financial crisis (GFC) where the ‘authorities were underwriting asset values’

We remain highly sceptical on the sustainability of recent equity market moves and believe the correct approach is to remain with a defensively positioned portfolio ready to take advantage of future setbacks.

At the end of the previous quarter, we expressed the view that whilst we did not see markets as being ‘cheap’ there was the potential for significant rallies in share prices. Since then equity markets have moved substantially higher, rivalling historic bull market moves.