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I gave a talk at King's College, London ThinkTank on the global macro
economy and I was bullish. Here is why:
The US markets are hitting all time highs. Despite all the negative global
news. That's not because they misjudge the news. No one is that stupid,
even people in finance.
Of course, FTSE is a worry - sideways. Hard Brexit would be a fall in the
Pound, so the index rising, and a soft Brexit leading to a relief rally.
So again, my senses tell me to be bullish.
As for the Americans - sure with impeachment, and everything else we
should be seeing a sharp fall. But I am following the trend and the Dow is
up and up and up.
For US and UK - here are my highest ranking stocks. There are more in the
UK, I suspect because of Brexit - ie it's overlooked! Stocks like BP,
Rolls Royce, Tullow, WPP, Persimmon, Bellway, IMI, Rightmove.
And in the US, the ones I like for a 12 month outlook based on their
valuations and growth of sales: AES, Arconic, HCA, Merck, Broadcom.
But I know you think it is the longest economic expansion for years, but I
am not worried about it running out of steam because the growth has been
slow.
And as UBS, the bank, told it's wealthiest clients, if there is a trade
deal and a co-ordinated stimulus then you can expect even more rises. The
most probably outcome is a limited deal and government spending - that
would be some rise in stocks.
Sterling has been rallying since the past month and I expect that to
continue, despite the election.
You may think things cannot be this good, after all, trade wars, slowing
China and India slowing, tariff wars, Brexit, UK and US election
uncertainty. But actually, things are looking up in terms of stocks.
But not all. Of course. De La Rue is facing trouble as are many other
companies. So as ever it is a 'stock pickers' market. That is you need to
be careful to focus on the ones which are winning.
Alpesh Patel
