28-10-2016 01:51 PM - edited 28-10-2016 04:13 PM
What signals and market indicators are the AMP Capital's Dynamic Markets team looking at this month? See a summary of our market views below:
The global financial crisis and the subsequent recovery has been like surviving a giant earthquake and then living through multiple aftershocks.
It is close to ten years since America’s housing bubble burst (as a glut of global savings, much of it from Asia, washed into subprime housing, with disastrous results). It is six since Greece’s insolvency sparked the euro crisis (as Germans helped to fund booms in Irish housing and Greek public spending). And it is almost 2 years since expectations of divergence in monetary policy in the US and the rest of the world pushed up the US dollar and sent a wave of capital out of the developing world, into the US.
The world’s glut of savings has now ended back in the US where it started (not in subprime, but this time in low volatility, defensive, quality themes).
These themes are expensive, over-owned, over-loved and vulnerable (ticking all the boxes for “avoid” under our investment process). Still, we doubt any unwinding to be disorderly as central banks remain friendly, real yields remain negative (despite rising nominal yields), and global growth is showing signs of broadening.