Financial Voice

Wednesday 25th April 2018 09:06 EDT
 

Dear Financial Voice Reader,

The threats keep coming, Russia, Syria, Brexit, Inflation, trade wars, radioactivity, Middle East, Korea. The IMF report, The Global Financial Stability report did not help allay my concerns, instead it added to them. Add to that 75% of the ultra rich say a recession is likely in 2 years according to a CNBC report.

IMF

The International Monetary Fund even said, “Financial vulnerabilities, which have accumulated during years of extremely low rates and volatility, could make the road ahead bumpy and could put growth at risk.”

“Valuations of risky assets are still stretched, with some late-stage credit cycle dynamics emerging, reminiscent of the pre-crisis period…This makes markets exposed to a sharp tightening in financial conditions, which could lead to a sudden unwinding of risk premiums and a repricing of risky assets” they added.

World Debt

Add to this that world debt is at a record $164 trillion, just as EU, UK and US Central Banks are raising rates.

GDP Growth

And there is more, GDP growth is set to slow in 2019 compared to 2018 according to the IMF.

Interest Rates

Combine with this, rising rates, as warned by the likes of Goldman Sachs, and you have an explosive mix potentially.

Oil

What possible reason with growth on the cards worldwide would OPEC and Russia have to cut supply? It’s hard to work out any reason and so the price of oil would bubble up would be the logical deduction. You only have to look at oil consumption, and China and India the second and third largest consumers to know combined with their GDP growth rates, demand is in place.

And now for good news

Well Goldman Sachs is not worried. The CEO of the firm says it looks ‘awfully good’. UBS think the risks will start in 3 years. They like Goldman Sachs do not see a trade war coming. UBS put well: “Global equities are supported by solid earnings growth. US companies, which make up about half of the global stock market, are benefiting from tax relief and a new fiscal spending package. By price-to-earnings ratio, the global stock valuation is slightly below long-term average. We remain overweight Eurozone versus UK stocks. Given their cyclical sector composition and high operational leverage, Eurozone companies are well placed to benefit from robust global demand, while UK firms should lag other regions in terms of earnings growth. We are also overweight emerging market (EM) versus Australian stocks.”

What I love about big banks is when they are direct. UBS certainly were that:
 
Alpesh B Patel
For a free online trading course visit www.alpeshpatel.com/apprentice


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